Canaan Inc, a publicly-traded crypto mining firm, has had a lucky bounce. The stock is trading up today, +16.75%, at the time of this post. Hovering just below $2.50 per share, it seems that bitcoin’s recent surge past $10,000 has helped the company.
Canaan trades on the NASDAQ and has had a rough time since it debuted in late 2019. The Company has had a bumpy ride down from its high of $8.98, back in November 2019. Before today’s bounce, the company had been on a volatile ride and some expected the stock to fall further.
Canaan Inc. had its initial public offering last year on November 21. Based in China, the company trades as American depository shares in the United States. The company designs and manufactures integrated circuits for bitcoin mining. Canaan surprised the market when they decided to list on an American exchange. Their competitors, Bitmain and Ebang, have not yet listed in the U.S. markets.
While it’s hard to correlate bitcoin’s price movement to global events in quite the same way one might in traditional markets a number of events could be in play. It could just be that the markets are having a good day generally speaking, with the S&P 500 up a similar percentage today. But another variable could be bitcoin’s recent halving, on May 11, 2020, which will make it more difficult to earn money from mining in the short term, but could eventually lead to a spike in price, as was experienced today.
Each halving cuts bitcoin’s reward for mining in half, which means that solving the cryptographic puzzle to find or mine new bitcoins becomes harder. This was initially designed to help manage bitcoin’s inflation rate but by reducing the rate new bitcoins are added to the market could result in a price increase as new investors struggle to find the assets.