Thank you, operator. Hello, everyone, and welcome to our earnings conference call.

Joining us today are our Chairman and CEO, Nangeng Zhang, and our CFO, Jin James Cheng. Leo Wang, Vice President of Capital Markets and Corporate Development, and Xi Zhang, Senior IR Manager, will also be available during the question-and-answer session.

Our CEO will start the call by providing an overview of the company and performance highlights for the quarter. Our CFO will then provide details on the company's operating and financial results for the period before we open up the call for your questions.

Before we begin, I would like to refer you to our safe harbor statement in our earnings press release. Today's call will include forward-looking statements.

These statements include, but are not limited to, our outlook for the company and statements that estimate or project future operating results and the performance of the company. These statements speak only as of today, and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call, or webcast, except as required by law.

These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent annual report on Form 20-F, for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements.

In addition, during today's call, we will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results.

You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, in our earnings press release, which is posted on the company's website. With that, I will now turn the call over to our Chairman and CEO, Nangeng Zhang.

NG, please go ahead.

Thank you, Gwen. Hello, everyone.

This is NG, CEO of Canaan. Thank you for joining our earnings conference call today.

James, our CFO, and I are here at our Singapore headquarters to share our financial results and recent business updates for the second quarter of 2026. Q2 2026 remained a difficult environment for the Bitcoin mining industry.

In the first half of the quarter, Bitcoin prices recovered from approximately $62,000 to $82,000 before declining sharply and reaching a period low of about $58,000 at the end of the quarter. During the quarter, hash price fluctuated between 2.8 and 3.9 U.S.

cents per terahash per second per day and remained at low levels. At the same time, in the U.S., the capital markets and the traditional mining companies continued to shift more attention towards AI and HPC.

Localized armed conflicts in certain countries and regions and the tighter mining-related policies in China and elsewhere are factors that affected miners' investment willingness and capacity. From the second half of the quarter onward, miner sales weakened noticeably, and elevated industry inventory levels further intensified price competition.

During the quarter, the company generated total revenues of approximately $32 million, below our previous guidance range of $35 million to $45 million. We sold 2.5 exahash per second of computing power, and our mining business produced 243 Bitcoins.

When we issued guidance in May, our demand outlook was primarily based on the market conditions in the first half of the quarter. We did not fully expect the later decline in demand and pricing.

In the second half of the quarter, Bitcoin prices fell quickly, miners became more cautious about equipment purchases, and high industry inventory levels increased price competition. These were the main reasons revenues came in below expectations.

In response to the revenue decline, we further tightened our spending, strengthened cash flow and liquidity management, and continued organizational optimization. As of quarter end, the company held 1,915 Bitcoins and 3,952 ETH, bringing our digital asset treasury to another record high.

I'll start with our mining machine business. As mining economics weakened, many miners delayed equipment purchases, and average selling prices remained under pressure.

During the quarter, we generated approximately $14 million in product revenue. In response to softened demand, we adjusted pricing more flexibly.

At the same time, we again emphasized production based on actual sales. We controlled new production according to real orders and put more focus on inventory management, cash flow, and order quality.

For existing machines, we will evaluate whether to sell them to customers or deploy them in our own mining operations based on cash collection, deployment conditions, and the additional investment required. Now let me turn to our mining operations.

In Q2, we adjusted our deployed hashrate in a timely manner based on power prices, load management, and operating conditions at different sites. We allocated resources to projects with better economics.

Mining revenues were approximately $18 million, accounting for more than 50% of the company's total revenue in Q2 and continuing to cover direct operating costs such as power and hosting. As of the end of June, our installed hashrate in non-JV projects was approximately 10.05 exahash per second, and average all-in power cost in June was about 4.3 cents per kilowatt-hour.

Overall power and hosting costs remained relatively competitive. Project ABC remains one of our key priorities.

For Project ABC, we focus not only on current-period profit, but more importantly on the cash it can generate and the long-term returns that can be created after optimization. This is consistent with the transformation the company is pursuing.

Whether it is Project ABC or the longer-term power resources we are developing, our goal is to gradually build mining and energy infrastructure assets that have a cost advantage and can generate sustainable cash flow. In Q2, together with our partner, we continued the mining machine upgrade at Project ABC.

The project generated positive cash flow and maintained efficient operations. As of the end of July, installed hashrate at Project ABC reached 4.85 exahash per second, up 10% from the end of March.

Through this project, while increasing hashrate and cash generation, we also gained experience in operations, power dispatch, fleet upgrades, and the management of low-cost power resources. Beyond traditional mining use cases, we continue to advance energy utilization partnerships such as compute-to-heat.

Our earlier Nordic project has already validated the feasibility of using hydro-cooled equipment for district heating. Our high-temperature hydro-cooled equipment can supply the hot water needed for heating, which is particularly suitable for winter heating demand.

These projects are still relatively small in scale, but using the heat generated from computing for comfort heating is a useful exploration of a compute-to-heat closed loop. Regarding R&D and products, we continued advancing the A16 series in the second quarter, with a focus on cost-effective air-cooled models and high-temperature hydro-cooled models.

We pay close attention to products' full life cycle economics, including purchase cost, power consumption, stability, maintenance, and deployment efficiency. On the consumer side, the second quarter was mainly devoted to R&D on new Avalon Home products, which we will prepare for mass production in the third quarter.

These Home series products are designed for home heating use cases, and we hope to capitalize on the winter heating season in the Northern Hemisphere and deliver a solid sales performance. Long-term power resources remain another key focus of the company's transformation.

Over the past several quarters, we have been advancing long-term, stable, cost-advanced, and expandable power resources projects in North America. On our fourth quarter 2025 earnings call, we mentioned our confidence in our ability to secure substantial load by year-end 2026, potentially reaching the gigawatt scale.

Based on the progress we have made so far, our confidence in securing gigawatt-scale load by the end of 2026 remains intact. We continue to work with all the stakeholders and hope to provide an update when we are in a position to do so.

Finally, let me discuss capital allocation. Since the beginning of the second quarter to date, the company has not utilized the ATM program or raised capital.

Under the existing $30 million share repurchase authorization, we recently monetized a portion of our digital assets and used the proceeds to repurchase the company's ADSs. We believe that the current share price meaningfully undervalues the company.

While retaining the capital needed for operations and project investment, we chose to use a portion of our digital assets for buybacks. We deployed around $2 million in the first quarter and around $5.4 million in August to repurchase our ADS shares.

In 2026, the company deployed $7.4 million and repurchased approximately 16.4 million ADSs so far. James will provide more details on the execution of digital assets monetization and the buyback.

James and I also continue to purchase the company's ADSs in the open market this quarter. We remain confident in company's long-term development and the transformation underway, and we hope these purchases further align management interest with those of our shareholders.

Digital assets remain an important part of the company's asset allocation. We will continue to evaluate the risks and rewards of holding digital assets, investing in mining and power infrastructure, and repurchasing the company's shares.

While meeting our operating and liquidity needs, we will choose the uses of capital that we believe can create the best long-term value per share. Finally, during this quarter, the company completed its transfer to Nasdaq Capital Market and has been granted an additional 180-day grace period to regain compliance with the minimum bid price requirement, with a deadline of January 11, 2027.

We will continue to monitor the trading price of our ADSs and take necessary actions to regain compliance and maintain the company's listing status. Despite the significant impact of industry volatility on our second quarter financial results, changes in the macro environment have actually strengthened our conviction in Bitcoin as a decentralized financial asset.

In response to market changes, we manage the inventory, expenses, and cash flow more strictly while continuing to optimize our mining fleet, advance fleet upgrades at Project ABC, explore compute-to-heat applications, and prepare Avalon Home products for mass production. Work on power resources also continued.

In addition, we monetized a portion of our digital assets to fund share repurchases. We believe we have come through the most difficult period and were able to sell these digital assets at relatively favorable prices.

Looking ahead to the third quarter, although Bitcoin price recovered somewhat at the end of August, miner procurement remains cautious, and industry inventory still needs to be digested. Some competitors have adopted a more aggressive pricing strategy to speed up cash collections, and we expect miner sales and average selling prices to remain under pressure in the third quarter.

Therefore, we remain cautious about the near-term mining machine market. Based on current market and operating conditions, we expect total revenues for the third quarter of 2026 to be between $11 million and $15 million.

This outlook reflects management's current judgment, and actual results may differ due to changes in macroeconomic conditions, policies, Bitcoin prices, and industry demand. That concludes my remarks.

Thank you. I will now turn the call over our CFO, James.

Thank you, NG. Hello, everyone.

This is James speaking to you from our Singapore headquarters. NG just walked you through the market environment and our business progress during the second quarter.

To summarize, in the second half of the quarter, Bitcoin prices and hash price weakened again. Miners became more cautious with equipment purchases, and elevated industry inventory added further pressure on pricing.

These pressures directly impacted our financial results. Computing power sold, average selling price, and revenue all declined, while lower market prices also affected the value of our inventory and fixed assets.

In this environment, we are not waiting for the market to turn. We are focusing on what we can control.

From a financial perspective, we are focused on three things: first, managing cash and maintaining sufficient liquidity; second, actively allocating capital, including repurchasing our shares when we believe they are significantly undervalued; and third, managing and optimizing our strategic assets so they can generate stronger cash returns over time. Let me go through each of these areas.

First, cash. As market conditions weakened, we tightened our expense and inventory management and placed even greater emphasis on cash flow.

At the end of the second quarter, we had $66 million in cash, up about $23 million from $43 million at the end of the first quarter. Despite generating less revenue during the quarter, our cash position improved.

During the quarter, we collected $54 million in cash from product sales. We also received $15 million from value-added tax refunds, cash distributions from equity investments, and Bitcoin-backed financing.

On the cash outflow side, we used $35 million for operating expenses and working capital, and another $11 million for wafer purchases. We also continued to exercise discipline on expenses.

Total operating expenses were $40 million in the second quarter, including $9.2 million of impairment charges on property, plant, and equipment, and $2.7 million of credit losses. Excluding these items, operating expenses were $28.2 million, down 9% sequentially and 14% year-over-year.

This is consistent with the build-to-order approach that NG discussed earlier: control new commitments, accelerate collections, manage inventory and working capital, and protect liquidity. In a downcycle, we believe financial resilience itself is a competitive advantage.

Second, capital allocation. At the end of the second quarter, we held 1,915 Bitcoin and 3,952 Ethereum.

Based on their carrying value as of June 30, our digital asset holdings were worth $112 million. Digital assets remain an important part of our asset base, but we do not believe they should simply be held passively.

We continuously compare different uses of capital: holding digital assets, investing in mining and power infrastructure, and repurchasing our own shares. When our shares trade significantly below what we believe to be their long-term intrinsic value, we view share repurchases as an attractive use of capital.

In late August, we were authorized by our board and sold all our Ethereum holdings and 54 Bitcoins, generating approximately $13.9 million in cash. We used a portion of these proceeds to repurchase our shares.

In the first half of 2026, we repurchased 2.8 million ADSs for about $2 million. In late August, we repurchased an additional 13.6 million ADSs for $5.4 million.

Year-to-date, we have repurchased 16.4 million ADSs for a total consideration of $7.4 million. Third, strategic assets, especially mining sites in the United States.

NG discussed the operational recovery and Bitcoin miner upgrades at Project ABC. Let me add a few points from a financial perspective.

During the second quarter, we've been upgrading the mining fleet at Project ABC to improve efficiency. Received $5.2 million in cash from Project ABC, including sales collections and cash distributions.

As of August 31st, cumulative cash received had reached $8.4 million. We would like to thank our partner, Wind HQ, for the top-tier management and the results of Project ABC.

Their long-term commitment and shared vision give us confidence in the future of ABC. As part of this process, the retirement of older mining machines and the related accounting treatment resulted in a one-time loss.

As a result, we recognized approximately $4 million of equity investment losses for Project ABC in the second quarter. There is an important distinction here between short-term accounting results and the long-term cash-generating ability of the assets.

We are not trying to preserve the book value of older equipment. We are trying to improve asset quality and generate more computing power and better economics from the same energy resources.

For Project ABC or other strategic assets, we look beyond current-period earnings. We are focused on the cash the asset can generate and the returns it can produce after optimization.

This is also consistent with the broader transformation NG discussed earlier. Let me briefly add a few operating and financial metrics.

Total revenue for the second quarter was approximately $32 million. Product revenue was approximately $14 million.

We sold 2.5 exahash per second of computing power at an average selling price of $5.5 per terahash per second. Mining revenue was approximately $18 million, with 243 Bitcoin mined during the quarter.

Mining accounted for 55% of total revenue. Excluding depreciation, the gross margin for the mining business was 20%.

These numbers also showed that during a weak market for mining machines, our mining operations have become an important contributor to revenue. Over time, we want to build a business that combines technology and mining machines, Bitcoin mining, power resources, and infrastructure.

Next, let me briefly discuss our income statement. Adjusted EBITDA was a loss of $74.9 million in the second quarter, broadly in line with the previous quarter.

Our results included several significant non-cash accounting adjustments, primarily inventory write-downs, impairment of property, plant, and equipment, and fair value losses on digital assets. These items reflect changes in the mining machine market and digital asset prices during the quarter, but they did not result in an equivalent amount of cash outflow.

When we're looking at the quarter, I think it is useful to separate three things: first, the real operating impact of weaker demand and lower pricing; second, the accounting impact from inventory, fixed assets, digital assets, and investments, a significant portion of which was non-cash; and third, what we are particularly focused on today: cash flow, liquidity, capital allocation, efficiency, and the ability of our assets to generate cash returns. Finally, turning to the third quarter.

As NG mentioned, although Bitcoin prices have recovered recently, miners remain cautious, industry inventory still needs to be absorbed, and mining machine pricing remains under pressure. As a result, we remain cautious about the near-term market environment.

Based on our current market and operating conditions, we expect total revenue for the third quarter of 2026 to be between $11 million and $15 million. This outlook reflects our current assessment of market and operating conditions.

Actual results may vary depending on changes in the macroeconomic environment, policy developments, Bitcoin prices, and industry demand. Let me close with three words that summarize our financial priorities today: cash, value, and assets.

First, manage cash: maintain financial discipline and liquidity so that we can navigate through the cycle. Second, manage value: continue to compare different capital allocation opportunities.

When we believe our shares are significantly undervalued, we are prepared to repurchase them to create value for long-term shareholders. Third, manage assets: whether it is our digital assets or Project ABC or the mining and energy infrastructures we are developing, our goal is not simply to own assets.

Our goal is to make those assets more efficient, generate cash, and create long-term returns. We will not build our strategy around predicting short-term movements in the price of Bitcoin.

What we can do is maintain financial discipline during the difficult market, improve capital allocation, and continuously upgrade the quality of our assets. When the next industry cycle comes, we want Canaan to have stronger balance sheet, higher-quality assets, stronger operating capabilities, and greater strategic flexibility.

Thank you. We will now open the call for questions.

Hey, morning, guys. Thanks for taking our question.

First one from us. Can you provide some additional color to help us understand how we should be thinking about this one gigawatt pipeline?

For instance, should we expect a dual deployment strategy balancing Bitcoin mining and HPC? If your team does pursue HPC, should we expect Canaan to go the colocation or the GPU cloud rental route?

Any color here would be great.

Thank you. I will take this one.

We are currently advancing several power resources projects internally. However, securing and developing power resources involve many steps, and it's become more and more complex.

The market attention and competition are both very high now. Even for the project that are moving the fastest, currently there are still key matters that need to be completed.

As a management team of a public company, we need to be very, very careful about when we disclose project details. If we disclose too early, it may affect project execution.

It may also cause the market to view an ongoing process as a confirmed outcome. For the benefit for the company and our shareholders, we do not think this is appropriate at this stage to disclose the exact number and the location of the sites, the power capacity for each project or specific stage of each project.

What we can say is our view from the Q4 2025 earnings call earlier this year, based on the progress we have made so far, our confidence in securing gigawatt-scale power resources by the end of this year remains unchanged. We will continue to working with the relevant parties and provide updates to the market when we are able to share more specific information.

Yeah. About the colocation or the GPU cloud rental, I think it's still too early to decide whether we will focus on colocation or GPU cloud rental.

There's many, many steps even between we secure the power resources and providing computing services. For a project of meaningful scale, we normally need different parties to work together, many different parties, including capital providers, engineering contractors, and other resources partners.

Which parts Canaan will participate in and what type of partnership we will use will depend on the specific project. Our approach is to use the capabilities and resources we already have, participate where we can add value, and work with partners that bring complementary strengths.

We do not assume that we need to manage the entire chain from the power to computing services by ourselves, and we will not make investments beyond our capabilities or capital capacity just to build an end-to-end model. At this stage, our main focus is still on advancing long-term, cost-advanced power resources.

As the projects become clear, we will evaluate the most suitable business model and the level for participation. For now, we do not think it's appropriate to make a formal choice between these two routes.

Thank you.

Thank you. We appreciate the color there.

Can you kind of formally remind us how is Canaan strategically positioned versus peers to secure and develop power for HPC? It seems like you guys will likely go more the development partner route, but should we expect any upcoming hires to build a data center development team internally?

Thank you.

Yeah. I think our advantage first comes from the practical experience we have built in Bitcoin mining over the past several years.

Mining require us to work with many types of power providers and to evaluate sites across different regions. The U.S.

is a very large market, and our local team has spent years visiting mining sites and advancing projects. Through this work, we have developed a better understanding of how power infrastructure works, the power conditions in different regions, and how to work with local partners.

We have also built relevant resources and relationships. Since late 2024, our strategy has gradually shifted from mainly adopting partnerships to increasing the amount of assets we own directly.

We want to have more control over long-term power resources and site operations. This direction has based on the needs of our own business and started before the market's broader focus on AI and HPC.

As the market attention has moved more towards AI and HPC, we see strong continuity with our existing direction of finding long-term, stable, cost-advanced, and scalable power resources. Our past experience, resources, and local relationships can continue to support us and give us a good starting point that we expand into this area.

Of course, HPC has higher infrastructure requirements, each project still needs to be evaluated and developed based on its actual use cases. Changing in market also affect competition for power resources and project economics.

We will also adjust our evaluation and the execution of power as needed while continuing to focus on long-term costs and investment returns. Thank you.

Great. Thank you, NG.

That was very helpful. Good luck the rest of the third quarter.

Yes, thank you for taking my question. With your internal mining fleet improving energy efficiency, can you tell us a percentage efficiency increase you should see by next year?

Oh,

I think you're asking about the mining machines efficiency, right?

Yes.

Yeah. I think for the A15, older machines, we are at for I think it's 15.8 to 17.8 joules per terahash.

That next level is our A16. We have 12.8 joules per terahash to 16.8.

It's already our cost-effective models. There are a huge advantage for these kind of machines.

For our mining fleet, we have plans to deploy at least a part of the A16 machines to our mining fleets next year. Currently, our all-in power cost was about 4.3 cents per kilowatt-hour, and still we have a positive cash contribution.

For next year, if you have reviewed the total network hashrate, I think it's declining for a few quarters already. It's quite easy to calculate the income for running a mining project.

We assume we will upgrade a significant percent of our machines from the old one to the more advanced and also cost-effective models next year. I hope I answered your question.

Thank you.

That helps a lot. Thank you.

Yeah. Then just on the power pipeline, are you still looking for stranded power around the world, or I guess if you could talk more about that development?

I think

Kevin, we always actively exploring and evaluating stranded power, trying to seek for opportunities. Of course, from different perspective, it takes quite a long time to evaluate the opportunities.

It's not easy to find the partners like Cypher Mining, Cipher Digital, or Wind HQ. Those partners in Project ABC, they supported us, they do good deals with us in a transparent way, in a fair way.

It's not easy every time we can find this kind of good partners. What we do is we mainly look at the long-term power cost, site stability, expansion potential, and grid access, and the local policies and regulatory conditions.

We also try to evaluate the best use for each site, including mining and where it is suitable potential HPC applications, together with the additional equipment and the investment required. Currently, we stay open-minded while maintaining our capital discipline.

No matter through acquisition, through JV, or joint development, we will only move forward when the risk and return are attractive, and the project can improve the quality of our long-term assets and operating flexibility. I should say currently we haven't yet deal another one just like Project ABC.

We do have some projects under discussion. We continue the strategy of expanding in North America, especially United States.

I think this strategy remains the same. We will do more, but we do it cautiously, slowly, with all kinds of evaluations done, but not immediately jump to many deals.

I think the capital allocation is also in a kind of very cautious way. Kevin, I don't know if I answer your question.

No, that's very clear. Thank you.

Thank you.

Thank you. It's

Hey, yeah, thank you guys for taking my questions. Appreciate the commentary on the current state of the product market.

With Bitcoin prices up around 20% over the past month, just curious if you've seen any positive implications for the global demand for mining machines?

Global demand, yeah. Global demand to be frank from this business, mining rig demand outside the U.S.

is also very, very weak at the moment. Weaker mining economics together with the policy developments and the geopolitical conditions in some regions have affected customers' willingness and ability to invest.

We have not yet seen a meaningful improvement in overall demand. One specific area of progress we can share is the ESG-related applications, particularly compute-to-heat.

Our Nordic heating projects already have 2 megawatts of equipment in operation, and the customer ordered another 6 megawatts in March this year. These projects combined mining with real heating demand.

The same energy input produced both computing power and the useful heat. We will continue to develop this kind of applications.

The market is still at an early age and small scale, this does not yet indicate that broader recovery in demand outside the U.S. Thank you.

Super helpful. Just wanted to touch a little bit on the Avalon Home series.

It seems like you guys are making some positive developments here. Can you just talk a little bit more about what you're seeing for those machines?

Then I think you guys mentioned some product developments there that could help potential winter seasonality. If you could just talk a little bit more about that.

Yeah. Avalon Home is a consumer product line that we have committed to developing.

In Q2, it generated approximately $1 million in revenue. It is still relatively small.

I think the long-term value lies on serving household users by combining computing and heating, which can broaden our customer base and revenue resources over time. After the heating season ended, sales of our Home products came down.

At first, I was a little disappointed. Then we realized that this may actually show that consumers are really using this product to heating other heating devices.

After all, it's not very easy to sell heaters in summer. It reminds us that we need to understand the use cases and the seasonality of this kind of business as a true consumer product business.

We began preparing new products for this year heating season in Q2 and in Q3. Currently, we are working on preparations for mass production, with plans to launch new products and updates during the Christmas shopping season.

Most of our key product line will receive updates, and we may also introduce additional products. At the same time, we will focus on sales channels, after-sales service, and user community, continue to improve the noise levels, yeah, easy for use, and many different kind of stuff related to the consumer products.

We hope Avalon Home will grow its revenue and contribution to the company and become a consumer business with lasting value. Yeah.

I think it is still too early to give a specific revenue mix target. Its share of total revenue will also depend on heating seasonality and the changes in our other business.

For now, the priority to get the product experience and the business fundamentals right so growth is supported by real household demand. I hope I answered your question.

Thank you.

Helpful. Thank you for taking my questions.

Thank you for taking my questions. This is Bill Chen on for Nick Giles.

First, I want to congrats on the maintaining positive cash contribution from mining in this pressured pricing environment. I guess on the share repurchase program with approximately $7.4 million deployed against I think the total of $30 million authorization, what's your expectation for the pace of repurchases between now and the program's expiration in mid-December?

I guess any color on how you're balancing the capital allocation strategy against liquidity preservation would be appreciated. Thank you.

Thank you, Bill. I think you asked a very forward-looking question about the future stock repurchase.

Currently, I think it's difficult to answer because in September, we will see a lot of activities in United States, especially on September 15, the senator will start to vote for CLARITY Act. We don't know if it passed, then what will happen to our industry, that could make Bitcoin price jump very high, and also our share price could fluctuate together with the Bitcoin price.

It's depending on what kind of a share price we were traded in the market, and it depends on how we consider it's better to do some allocation to do stock repurchase. It's difficult to predict the pace.

To be very honest, as CEO and I myself, we have already purchased to get more shares of the company. We do have strong confidence that in the second half, our share price should come back again with some good trajectory.

Even we are currently under the restriction of Nasdaq compliance requirement, we better to regain compliance very soon. That's why we consider stock repurchase is something we need to put a lot of efforts trying to make sure we do and we allocate funds to do.

That's why we discussed with our board, and we got the authorization from them and say management can start to sell the digital assets to generate cash and to repurchase. I think our board understands the shareholder value quite well.

They support us to do this. We are together with our shareholders, and we are the shareholders.

We will do everything we can to do, but not within September, the particular month, but through the whole second half year or even future. I think that's our commitment.

That's my answer. Thank you, Bill.

Thanks so much for the answer. I guess maybe one more, if I could, specifically on Project ABC.

We love to see all the progress, and given now it has reached 4.85 exahash, what's the next milestone or target for the project, and if there's a rough timeline you can provide? Thanks so much.

I think we have been actively exploring and evaluating this type of opportunity. We need the power cost, stability, scalability, and grid access are suitable.

We can use mining as a flexible load to put the resources to work relatively quickly. If the site conditions allow, we have the flexibility for other computing load in the future.

Our approach is stay open-minded and while maintaining capital discipline. Whether through acquisition, JV, or joint development, we will only move forward when the risk and the returns are attractive, and the project can improve the quality of our long-term assets and operating flexibility.

We do have very good machine even maybe still at the wafer level, but we can manufacture machines in a relatively short time and deploy them into new sites if we find somewhere it can fulfill our requirements. Currently I think still at some stage of a bear market.

It's not a bull market, right? We will have very high cautious in investment and consume our cash flow to do this kind of project.

Currently we are still evaluating the resources and wait for the best timing to get the scale-up of our mining fleets include upgrade the machines. Thank you.

I hope I answered your question.

Yeah. Thanks for the detailed answer and continued best of luck.

Hello, this is Ian Generous dialing in for Michael Donovan. Thank you for taking my questions.

Firstly, on potential JV partners, what type of companies are you engaging with today? Are perspective AI customers already involved in evaluating these sites?

Additionally, what requirements are they emphasizing, and would you expect to secure customer commitment before making a significant development investment?

We are open to using JVs or development partners. From securing power resources to building infrastructure and finally providing compute services, different stages require different capabilities and capital.

For each project, we will choose a structure that allow all parties to contribute their strengths. Canaan has always valued working with partners.

Our past joint mining projects, as well as Project ABC with Wind HQ, have given us useful experience. At Project ABC, we combine our mining machine and technology capabilities with our partner's site operations and power management experience.

Together, we upgrading the fleet and improve the project's cash returns. These experience can also support future partnerships.

I think since late 2024, we have gradually increased the amount of assets we own directly, but this does not mean that we need to do everything by ourselves. We want to have more control over core assets and long-term resources while still working with partners that can bring complementary capabilities and resources.

For future projects, we will not limit ourselves to a JV. Joint development or any other structure is acceptable.

We will focus on how investment and responsibilities are shared. Whether the risk Canaan takes, it matches by the return we can earn.

Our final decision will always be based on the long-term shareholders' interest and the value per share. Yeah.

Currently, we do not have any specific partnership agreements that we can disclose. Thank you.

That's great color, thank you. Then lastly, if I may, more strategically, how should we think about the allocation of capital and management resources between pursuing the AI power land opportunity and then the core Bitcoin mining business?

Let me think. I think currently, we have already invested in the Bitcoin mining machines, key core parts like the wafers.

We already have them in our inventory or our partner's inventory. When we have the clear opportunities to deploy the mining machines to have a good cash returns in the future, then we will do it.

For the data center, I just mentioned, we are very open to do any kind of partnerships with partner, with third parties, with any kind of companies can contribute their benefits to the projects. To be clear, we are not going to do the end-to-end projects by ourselves because I think to develop a meaningful scale of AI HPC data center needs a lot of capitals, which may be out of our capital capabilities.

I think overall our first priority is to please the interest of our shareholders. What kind of benefits we can get for every share is the most important part.

Thank you.

I would like to add some color in this. As NG mentioned, we do have the inventory of mining machines now.

When we do some new mining corporations, this can be injected to the project as a kind of CapEx investment, and without spending any cash. For the new HPC data center or this kind of power infrastructure things, sometimes we have to use some cash as a deposit to secure some opportunities.

That's something we do. We allocate some of the money as deposit to secure some of the opportunities.

That's what we are doing now. I think from long-term perspective, we will continue to balance between the different business, and we will utilize our technology in mining machine side and do mining operations.

In the other side, I think step-by-step, we start from initial capital in a kind of smaller scale, but in future, with pipelines, with different projects on air, and we will see step-by-step we accumulate more and more assets. With this assets, we can use this assets as collateral to leverage to get more funds to sponsor the business in the data center part.

I think that's something in future step-by-step we will reach there. We should try to secure gigawatts-level power.

With this on hand, and then we can start to talk about the next step. As NG mentioned, we do have the long-term ambition, but in short term, we will not just immediately try to do everything in the ecosystem.

We will do step-by-step and gradually grow ourselves. Thank you.

Thank you for the insight and for taking my questions, and congrats on the quarter.

Thank you.

Thank you. Thank you for the question.

Thank you, everyone, for joining us today. If you have any further questions, please feel free to reach out to us directly or through the contact information on our website.

Thanks.