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Chinese Bitcoin mining company Canaan has reported slight improvements in some of its financials for the first quarter of 2023. However, progress is still far behind this time last year.

According to an unaudited report posted on its investor relations page, Canaan’s net loss for the first quarter was $84.4 million, down from a net loss of $91.6 million in the prior quarter. The net loss represents a big turnaround from the same period in 2022, when the company reported net income of $65.1 million.

Diluted net loss per American depositary share (ADS) for the first quarter of 2023 was $0.51, down from $0.55 in the prior quarter, while diluted net loss per ADS for the same period in 2022 was $0.38. According to Investopedia, an ADS is a share in a non-US company that is held by a United States depository bank and is available for purchase by investors.

The company says it is expanding its operations despite the ongoing bear market and the associated decline in revenue.

Quarterly results were impacted by several factors, including low market demand hampering product revenues, the ongoing crisis in the banking system, and a slow recovery in the price of Bitcoin (BTC). Revenue was $55.1 million in Q1, compared to $58.3 million in the prior quarter and $201.8 million in the same period in 2022.

“In the first quarter of 2023, we experienced further reductions in our sales revenue due to lower industry sales prices and unpredictable payment and delivery delays following a series of US bank failures. In addition, our mining business encountered challenges that delayed the increase in our installed hash rates,” said Canaan’s chief financial officer James Cheng in the report, claiming that the revenue results “were outside” expectations.

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A breakdown of revenues shows $44.1 million comes from product revenues and $11.1 million from mining activities, along with $300,000 from other revenues. Mining revenue was up 3.3 percent from $10.7 million in the fourth quarter of 2022 and up 130.2 percent from $4.8 million in the same period in 2022.

Mining costs include electricity and hosting, as well as equipment wear and tear and depreciation.

Total operating expenses in the first quarter of 2023 were $38.1 million, compared to $60.8 million in the fourth quarter of 2022, and were nearly flat from $38 million in the same period last year. “We managed to reduce our operating loss by 31.4% compared to the previous quarter,” Cheng said.

The report shows a decline in investment in research and development. Canaan spent $19.1 million in the first quarter, compared to $33.4 million in the previous period. The decrease was due to one-time costs of $14.3 million for research and development of the A13 series products. During the same period in 2022, the company allocated $15.1 million to research and development.

According to the report, as of March 31, 2023, the cryptocurrency assets held by Canaan were 623 BTC worth $13.4 million. Cash and cash equivalents were $72 million, compared to $101.6 million at December 31, 2022.

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