Canaan Inc ($CAN): Path to a 12X Return

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Picture this, a NASDAQ listed
company trading below $1.00.

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No momentum.
A delisting notice hanging over

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it, Dilution in the past,
Bitcoin exposure amplifying

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every move.
Today.

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We are not pitching a stock.
We are examining a question.

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What would have to be true for
Kane and Ink to justify a four

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times return in one year and a
12 times return over five years?

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This is a make money case study
in asymmetry.

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Most traders see 0.78 and think
penny stock trash.

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That is the wrong.
Reaction the right.

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Reaction is to ask why the
market is demanding this much

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risk premium, because when risk
is obvious and fully priced in,

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volatility becomes an asset.
And this stock has?

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Volatility, roughly. 8% ADR with
a functional options chain.

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That alone tells you something
interesting is going on.

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I want to slow this down.
A bad chart does not

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automatically mean opportunity
delisting.

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Risk is real, dilution is real,
and if execution fails, this

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goes nowhere.
But when you see a company with

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record revenue, a growing
Bitcoin treasury product

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innovation, and a buy rating
while trading below liquidation

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narratives, you are forced to
separate price from business

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trajectory.
That is where long term

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asymmetry can start.
And that tension is the core of

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this episode.
Price says distress.

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Operations say transition.
The market is asking a single

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question.
Will this company remain A

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cyclical hardware vendor or can
it evolve into diversified

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compute infrastructure?
Every segment today builds

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toward that answer.
Let us slow this down and

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separate signal from emotion.
The market is not confused about

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Canaan.
It is doing something very

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specific.
It is pricing in a failure

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scenario and then adding a
penalty on top for uncertainty.

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That is why the stock is not
drifting quietly.

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It is volatile.
Volatility is the fingerprint of

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unresolved outcomes.
The price below $1.00 is not an

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accident.
It is the market saying this

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company must prove it deserves
to exist in the public markets.

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And that framing matters because
when people hear simple dollar.

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They think broken, but.
Broken stocks do not trade like

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this.
Broken stocks.

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Decay.
They bleed.

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Volume.
They stop moving.

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This thing swings 8% on an
average.

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Day that tells you there are.
Two active camps fighting each

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other.
One camp is saying delisting is

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inevitable.
The other.

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Camp is saying the market is
overreacting.

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When you see that kind of fight,
you do not dismiss it you.

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Study it.
I hear both of you, but I want

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to push back on something.
Volatility alone does not mean

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opportunity.
Sometimes it just means paying

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with no reward.
We have all seen stocks stuck

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below listing requirements for
years.

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They survive, but shareholders
do not win.

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So my question is simple.
What is the mechanism that turns

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this from a survival story into
a value creation story?

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Without that, volatility is just
noise.

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That is fair.
So let us define the mechanism.

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Clearly.
The first mechanism is time.

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NASDAQ gave the company 180
days.

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That creates a countdown.
Markets are terrible at pricing

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countdowns because probabilities
change discreetly.

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Nothing happens for weeks.
Then one announcement changes

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everything.
That is why timing matters here.

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The second mechanism is
operational visibility.

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Revenue has grown.
Bitcoin production is real.

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The business is not fictional.
What is missing is earnings

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credibility.
And that is?

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Where traders and.
Investors split again.

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Investors wait for earnings to
turn positive.

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Traders front.
Run the moment when earnings

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start to matter.
That usually.

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Happens before the actual.
Flip when?

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Management stops talking about
survival and starts talking

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about scaling.
You do not need positive EPS.

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To trade that shift.
You need the.

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Expectation of it, but.
Expectations cut both ways.

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The same expectations can be
destroyed by dilution, and

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dilution is not theoretical
here.

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The share count has exploded.
That matters for any long term

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holder.
Even if the business improves,

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the per share outcome can
disappoint.

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So we cannot just hand wave
dilution away.

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It is central to the risk case,
absolutely.

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And this is where the market may
be double counting risk.

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Dilution risk and delisting risk
overlap.

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If the company stabilizes its
listing, it reduces the need for

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emergency capital raises.
If it reduces capital raises,

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dilution pressure eases.
These risks are not independent,

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they are linked.
Markets often price them as

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separate when they are not.
That is where mispricing can

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emerge.
Which is why position.

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Sizing matters more than
conviction here.

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I'm not betting My Portfolio on
management execution.

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I'm betting a small percentage
on the possibility that the

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worst case is not the base case
when the market prices a company

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as if failure is the.
Default survival.

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Alone becomes a catalyst.
I can accept that framing, but I

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want to be clear for listeners.
This is not a buy and forget

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story.
This is a monitored position.

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You watch listing status.
You watch share issuance, You

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watch Bitcoin price sensitivity.
If those variables move against

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you, you exit.
This is asymmetric only if you

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respect the downside.
That is the key insight.

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Asymmetry does not mean
optimism.

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It means defined risk and
open-ended upside.

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The market is already assuming
several negative outcomes.

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The upside comes from even
partial relief of those

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assumptions.
And that sets the stage for why

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a four times move in a year is
not fantasy.

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It is math.
But only if execution improves.

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And if execution does not
improve, the market is already

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telling you what happens.
The price is your stop.

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To understand why this stock
behaves the way it does, we have

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to dismantle a mental shortcut.
Most people label Canaan as a

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Bitcoin miner and stop thinking
that shortcut is dangerous.

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Canaan is not just mining
Bitcoin.

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It designs silicon, it sells
hardware, it operates self

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mining, it holds digital assets,
it experiments with energy

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reuse.
This is not a single revenue

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stream company and markets are
very bad at valuing hybrids.

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Exactly if this were.
A pure miner.

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It would trade like a levered
Bitcoin ETF.

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It does not.
If it were a.

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Pure hardware vendor.
It would trade like a cyclical

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manufacturer.
It does not.

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The market hates things.
It cannot bucket cleanly when

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analysts cannot agree on which
model to use.

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Price discovery breaks.
That is where opportunity

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sometimes hides.
Or where value traps hide.

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I want to slow this down again.
Multiple revenue streams do not

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automatically mean a Better
Business.

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Sometimes they mean lack of
focus.

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So the key question is not how
many things they do.

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It is whether any of those
things can generate durable

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margins.
Because without margins, scale

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just amplifies losses.
That is the right lens.

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So let us walk through the
stack.

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First layer is hardware.
Canon designs ASIC chips and

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sells mining rigs.
Hardware margins are cyclical.

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They expand when Bitcoin prices
are high and collapse when

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demand slows.
That volatility is real, and it

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deserves a low multiple.
The market is right about that

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part.
But the market stops there and

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that is the mistake, because
hardware sales are not the whole

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story anymore.
Self mining is the second.

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Layer.
When Canaan mines Bitcoin

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itself, it converts hardware
margin into asset accumulation.

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That matters because it creates
optionality.

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Bitcoin on the balance sheet is
not just exposure.

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It is strategic flexibility.
I agree in theory, but in

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practice self mining is brutal.
Difficulty rises, energy costs

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fluctuate, post having economics
are unforgiving.

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Many miners destroy capital
trying to scale into hostile

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conditions.
So again, what makes Canaan

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different?
Why does this not end the same

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way?
Two things, cost structure and

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integration.
Canaan designs the machines it

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uses.
That lowers its effective cost

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base compared to 3rd party
buyers.

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And now we are seeing something
new.

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Heat recovery, energy reuse,
grid partnerships.

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This is not marketing fluff.
It is an attempt to redefine the

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cost curve.
If successful, it reduces the

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biggest variable in mining
power.

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And this.
Is where traders wake.

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Up because when miners find ways
to monetize.

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Waste heat or stabilize grids or
operate as flexible load.

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They stop being pure commodity
players.

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They become infrastructure
partners.

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That changes how capital.
Views them not immediately, but

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gradually and price.
Moves before reports catch up.

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I want to challenge that these
projects are pilots, proof of

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concept.
They are interesting but not yet

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material.
The market might be right to

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discount them until they scale.
Otherwise we risk projecting 5

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year narratives onto a one year
balance sheet.

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That tension is exactly why the
stock trades where it does long

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term optionality versus short
term fragility.

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The market is saying show me.
Investors are saying wait,

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Traders are saying volatility
pays me while we wait.

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This is not a conviction trade,
it is a process trade.

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And that is why the options
chain matters.

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Because you don't need to be
right today.

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You need controlled.
Exposure while.

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Time does the work if nothing
improves.

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Volatility still gives you
exits.

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If something improves, convexity
kicks in fast.

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I can live with that framing,
but let me be clear for

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listeners, the Business Today
does not justify a tech

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multiple.
Not yet.

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The bull case depends on
execution, on discipline, on

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resisting dilution when
possible, on scaling what works

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and killing what does not.
If that happens, the story

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changes.
If not, the stock deserves to

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stay cheap.
And that is the essence of this

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case study.
The market is not stupid, it is

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cautious.
The opportunity exists only

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because outcomes are still
unresolved.

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And that sets up the next
question.

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If the business model
stabilizes, how does the market

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re rate it and when would that
happen?

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Now we get to the part most
investors misunderstand.

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Earnings per share does not move
stocks the way people think it

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does.
Stocks do not rally when EPS

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turns positive.
They rally when the market

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becomes confident that EPS will
turn positive.

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That distinction is everything.
Exactly.

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By the time EPS is printed in
black ink, the easy money is

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already gone.
Traders are early by.

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Design institutions front run
certainty.

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Retail waits for confirmation.
That is why the chart often

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looks boring, right?
Before it explodes.

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I want to ground this in
reality.

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Canaan is not profitable today.
Losses are shrinking, yes, but

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shrinking losses are not
profits.

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So the question listeners should
be asking is not when EPS turns

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positive, but when the
probability of positive EPS

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becomes undeniable.
And that probability shift

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usually happens 6 to 9 months
before the actual report.

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That is the window where
evaluation frameworks begin to

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change.
Analysts move from survival

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models to operating leverage
models.

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Language changes from cash burn
to margin expansion.

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The narrative pivots quietly
before Price reacts violently.

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And this is where traders like
me lean in, because you can feel

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it.
Before you can prove it,

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volatility compresses.
Bad news stops pushing price

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lower.
Good news starts to stick.

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That is the market telling you
something without saying it out

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loud.
Or it is just a pause before the

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next dilution.
That is the risk we cannot

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ignore.
Canaan has raised capital

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aggressively.
Share count has ballooned.

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If management keeps issuing
equity, any EPS inflection gets

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pushed out.
So timing matters.

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Execution matters.
Capital discipline matters.

240
00:11:29,720 --> 00:11:32,320
Absolutely.
And that is why the baseline

241
00:11:32,320 --> 00:11:34,640
thesis here is not blind
optimism.

242
00:11:34,880 --> 00:11:38,440
It is conditional.
If dilution slows, if revenue

243
00:11:38,440 --> 00:11:42,240
growth persists, if margins
stabilize, then the EPS path

244
00:11:42,240 --> 00:11:44,880
becomes visible.
If those conditions fail, the

245
00:11:44,880 --> 00:11:46,920
thesis breaks.
But here is the.

246
00:11:46,960 --> 00:11:50,360
Asymmetry the stock.
Already prices and failure at

247
00:11:50,360 --> 00:11:52,600
under $1.00.
The market is effectively saying

248
00:11:52,600 --> 00:11:56,040
this company might not make it.
That pessimism creates leverage

249
00:11:56,040 --> 00:11:59,320
to improving expectations.
You do not need perfection, you

250
00:11:59,320 --> 00:12:01,840
need less bad.
I agree with that framing.

251
00:12:02,520 --> 00:12:05,520
In early turnarounds,
expectation changes matter more

252
00:12:05,520 --> 00:12:09,360
than absolute results.
If the company can show even 1/4

253
00:12:09,360 --> 00:12:12,840
where losses narrow faster than
expected without new dilution,

254
00:12:13,200 --> 00:12:16,880
the narrative changes fast.
And this connects directly to

255
00:12:16,880 --> 00:12:20,480
how we structure exposure.
You do not go all in waiting for

256
00:12:20,480 --> 00:12:23,360
EPS.
You scale, you manage delta.

257
00:12:23,520 --> 00:12:27,200
You use time as an ally.
Because the reward is not the

258
00:12:27,200 --> 00:12:30,040
report itself.
The reward is the repricing of

259
00:12:30,040 --> 00:12:33,280
probability.
Which is why options exist not

260
00:12:33,280 --> 00:12:35,200
to gamble.
To shape exposure.

261
00:12:35,640 --> 00:12:38,200
Long dated calls let you stay in
the story while limiting

262
00:12:38,200 --> 00:12:40,520
capital.
At risk short term volatility

263
00:12:40,520 --> 00:12:43,360
lets you trade around that.
Core, you are not predicting the

264
00:12:43,360 --> 00:12:46,000
quarter you are positioning for
the regime change?

265
00:12:46,120 --> 00:12:49,680
I want to add a warning here.
EPS inflections attract momentum

266
00:12:49,680 --> 00:12:52,120
capital.
Momentum capital leaves just as

267
00:12:52,120 --> 00:12:54,600
fast.
If fundamentals do not continue

268
00:12:54,600 --> 00:12:57,600
improving after the first turn,
the stock gives it all back.

269
00:12:58,000 --> 00:13:00,800
Long term investors need to be
ready for that whiplash.

270
00:13:01,240 --> 00:13:04,080
That is an important point.
This is not a set and forget

271
00:13:04,080 --> 00:13:06,280
trade.
It is a monitored thesis.

272
00:13:06,440 --> 00:13:09,640
You watch margins, You watch
cash flow, You watch balance

273
00:13:09,640 --> 00:13:12,240
sheet behavior.
The moment the company violates

274
00:13:12,240 --> 00:13:15,600
those signals, you reassess.
But if they execute.

275
00:13:15,760 --> 00:13:18,320
The payoff is front.
Loaded stocks like this.

276
00:13:18,320 --> 00:13:21,680
Do not climb.
Slowly they gap, they reprice

277
00:13:21,680 --> 00:13:23,520
in.
Steps and those steps.

278
00:13:23,520 --> 00:13:25,400
Usually start.
Before the income statement

279
00:13:25,400 --> 00:13:27,640
turns positive.
So the real question for

280
00:13:27,640 --> 00:13:30,440
listeners is this.
Are you comfortable owning

281
00:13:30,440 --> 00:13:33,720
uncertainty before it resolves?
Because that is where the edge

282
00:13:33,720 --> 00:13:36,360
lives.
If you wait for clarity, you

283
00:13:36,360 --> 00:13:39,640
will pay a much higher price.
And that brings us to the next

284
00:13:39,640 --> 00:13:41,840
layer.
If one company in a sector

285
00:13:41,840 --> 00:13:46,480
flips, what happens to the rest?
Because individual EPS stories

286
00:13:46,480 --> 00:13:49,920
rarely stay isolated, they
trigger sector RE ratings.

287
00:13:50,160 --> 00:13:53,640
This is where single stock
analysis quietly turns into

288
00:13:53,640 --> 00:13:56,680
sector analysis.
Because markets do not reprice

289
00:13:56,680 --> 00:13:59,760
companies in isolation, they
reprice categories.

290
00:14:00,200 --> 00:14:03,120
When one name flips from
unprofitable to profitable,

291
00:14:03,360 --> 00:14:06,280
investors immediately start
asking who is next.

292
00:14:06,560 --> 00:14:08,240
And this is where.
Traders get paid.

293
00:14:08,600 --> 00:14:11,640
Not by predicting the winner,
but by anticipating the rotation

294
00:14:12,120 --> 00:14:14,400
the first stock moves.
Because it delivers proof.

295
00:14:14,880 --> 00:14:16,840
The second and third.
Move because capital.

296
00:14:16,840 --> 00:14:18,680
Hunts for the same setup at a
discount.

297
00:14:19,280 --> 00:14:21,880
Historically, this pattern is
very consistent.

298
00:14:22,280 --> 00:14:25,520
You see it in semiconductors,
you see it in biotech, you see

299
00:14:25,520 --> 00:14:28,200
it in energy.
The first company proves the

300
00:14:28,200 --> 00:14:31,080
model works.
The market then extrapolates

301
00:14:31,080 --> 00:14:34,480
that success across the peer
group, often too aggressively.

302
00:14:34,880 --> 00:14:38,640
In Bitcoin mining and compute
infrastructure, this dynamic is

303
00:14:38,640 --> 00:14:41,680
especially powerful because the
sector has been written off so

304
00:14:41,680 --> 00:14:46,280
many times, cyclical, capital
intensive, too dependent on

305
00:14:46,280 --> 00:14:49,320
commodity pricing.
When one company shows durable

306
00:14:49,320 --> 00:14:51,760
earnings, the entire narrative
shifts.

307
00:14:52,200 --> 00:14:54,520
Exactly the sector.
Goes from uninvestable to

308
00:14:54,520 --> 00:14:57,040
misunderstood, and that
transition creates violent

309
00:14:57,040 --> 00:14:59,320
upside.
Shorts cover momentum, funds

310
00:14:59,320 --> 00:15:02,040
pile in even long.
Only managers who swore they

311
00:15:02,040 --> 00:15:04,720
would never touch miners start
allocating small positions just

312
00:15:04,720 --> 00:15:06,480
to not miss it.
But there is a catch.

313
00:15:06,920 --> 00:15:09,400
The second wave stocks almost
never deserve the same.

314
00:15:09,400 --> 00:15:12,680
Multiple investors assume they
will execute like the leader.

315
00:15:12,960 --> 00:15:16,120
Some will, most will not.
That is where discrimination

316
00:15:16,120 --> 00:15:18,320
matters.
And that is why we focus on

317
00:15:18,320 --> 00:15:21,320
structure again, not price
structure.

318
00:15:21,840 --> 00:15:25,400
Who controls their energy costs?
Who has vertical integration?

319
00:15:25,640 --> 00:15:28,240
Who has optionality beyond pure
mining?

320
00:15:28,720 --> 00:15:32,040
Those are the names that benefit
most from a sector RE rating.

321
00:15:32,480 --> 00:15:33,840
And you can see the early
signals.

322
00:15:33,840 --> 00:15:37,320
Before price explodes,
correlations rise, stocks that.

323
00:15:37,320 --> 00:15:39,520
Used to move independently,
start moving together.

324
00:15:39,800 --> 00:15:42,560
Bad news stops hurting.
Good news starts to lift peers,

325
00:15:42,560 --> 00:15:43,920
even if it's not directly
related to.

326
00:15:43,920 --> 00:15:45,840
Them.
This is where long term

327
00:15:45,840 --> 00:15:49,400
investors need discipline.
Sector re ratings overshoot.

328
00:15:49,680 --> 00:15:52,280
They always do.
The first move is logic.

329
00:15:52,680 --> 00:15:56,320
The second move is narrative.
The third move is speculation.

330
00:15:56,840 --> 00:15:59,600
If you do not know which phase
you are in, you will give back

331
00:15:59,600 --> 00:16:02,000
gains.
That is why we separate one year

332
00:16:02,000 --> 00:16:05,280
targets from five year targets.
The one year move is about

333
00:16:05,280 --> 00:16:08,440
repricing expectations.
The five year move is about

334
00:16:08,440 --> 00:16:11,240
compounding execution.
They are driven by different

335
00:16:11,240 --> 00:16:13,320
forces and different investor
bases.

336
00:16:13,720 --> 00:16:15,480
Traders.
Thrive in the repricing.

337
00:16:15,480 --> 00:16:19,280
Phase volatility.
Expands options, get mispriced,

338
00:16:19,720 --> 00:16:21,360
you can sell strength and buy
weakness.

339
00:16:21,360 --> 00:16:23,400
Repeatedly.
As long as the narrative stays

340
00:16:23,400 --> 00:16:26,960
intact, this is where trading
around a core adds real returns.

341
00:16:27,400 --> 00:16:29,600
Investors thrive after the dust
settles.

342
00:16:29,960 --> 00:16:32,640
Once the sector finds a new
baseline valuation, the

343
00:16:32,640 --> 00:16:34,840
survivors start compounding
quietly again.

344
00:16:35,160 --> 00:16:38,600
That is when patience replaces
activity, and this matters for

345
00:16:38,600 --> 00:16:41,640
Canaan specifically.
If one mining or compute

346
00:16:41,640 --> 00:16:44,640
infrastructure company proves
sustainable earnings post

347
00:16:44,640 --> 00:16:48,160
halving, the market will not
wait years to reward others.

348
00:16:48,400 --> 00:16:50,200
It will start repricing
immediately.

349
00:16:50,600 --> 00:16:53,560
Even if those others are still.
Losing money because markets

350
00:16:53,560 --> 00:16:55,840
price trajectories, not
snapshots.

351
00:16:56,280 --> 00:16:58,840
The moment the path becomes
visible, capital moves.

352
00:16:59,040 --> 00:17:02,560
But we need to be honest.
Sector re ratings cut both ways.

353
00:17:02,960 --> 00:17:06,119
If the first mover fails after
flipping, the entire group gets

354
00:17:06,119 --> 00:17:08,599
punished.
Trust evaporates fast.

355
00:17:08,920 --> 00:17:12,319
That is why risk management is
not optional here, which sets up

356
00:17:12,319 --> 00:17:15,119
the next segment.
How to structure exposure when

357
00:17:15,119 --> 00:17:18,319
upside comes in bursts, downside
comes in cliffs.

358
00:17:18,560 --> 00:17:22,480
And timing is never perfect.
Because this is not about being

359
00:17:22,480 --> 00:17:25,640
right, it is about staying in
the game long enough for the

360
00:17:25,640 --> 00:17:28,840
thesis to work.
This is the part most people get

361
00:17:28,840 --> 00:17:30,320
wrong.
They think options are about

362
00:17:30,320 --> 00:17:31,440
leverage.
They're not.

363
00:17:32,080 --> 00:17:34,400
Options are about control,
control of timing.

364
00:17:34,800 --> 00:17:37,000
Control of risk.
Control Psychology.

365
00:17:37,320 --> 00:17:40,360
And control is exactly what you
need in a stock like this.

366
00:17:40,680 --> 00:17:44,720
High volatility, structural
uncertainty, binary events like

367
00:17:44,720 --> 00:17:47,120
compliance notices and earnings
inflection.

368
00:17:47,480 --> 00:17:50,640
Holding only equity forces you
to absorb every swing

369
00:17:50,640 --> 00:17:54,320
emotionally and financially.
I want to slow this down for a

370
00:17:54,320 --> 00:17:57,560
second because many long term
investors hear options and

371
00:17:57,560 --> 00:18:00,000
immediately think unnecessary
complexity.

372
00:18:00,440 --> 00:18:03,640
The question should be simple,
does this improve risk adjusted

373
00:18:03,640 --> 00:18:06,640
outcomes or not?
It absolutely does if used

374
00:18:06,640 --> 00:18:07,920
correctly.
Look at the.

375
00:18:07,920 --> 00:18:11,000
Average daily range 8% moves are
normal here.

376
00:18:11,240 --> 00:18:14,200
That's not noise, that is
tradable volatility.

377
00:18:14,360 --> 00:18:17,040
If you ignore it, you are
leaving money on the table and

378
00:18:17,040 --> 00:18:20,040
increasing stress.
The framework used here is

379
00:18:20,040 --> 00:18:23,440
simple but powerful.
Sell exposure when the stock

380
00:18:23,440 --> 00:18:27,200
moves a full daily range up.
Add exposure when it retraces

381
00:18:27,200 --> 00:18:30,440
half a daily range.
That alone forces discipline.

382
00:18:30,800 --> 00:18:33,880
You sell strength and buy
weakness mechanically, but there

383
00:18:33,880 --> 00:18:36,120
is a line where activity becomes
over trading.

384
00:18:36,680 --> 00:18:39,880
How do you avoid turning a long
term thesis into a short term

385
00:18:39,880 --> 00:18:41,840
game?
By anchoring everything to a

386
00:18:41,840 --> 00:18:45,960
core position, the core never
gets touched unless the thesis.

387
00:18:45,960 --> 00:18:48,840
Breaks the trades happen.
Around it you are.

388
00:18:48,840 --> 00:18:51,760
Harvesting volatility without.
Changing your directional bet.

389
00:18:52,040 --> 00:18:55,640
This is critical.
The core represents conviction.

390
00:18:56,040 --> 00:18:58,000
The trades represent
uncertainty.

391
00:18:58,560 --> 00:19:02,080
Mixing those two mentally is
what causes people to blow up,

392
00:19:02,560 --> 00:19:05,160
and the use of options
specifically adds another layer

393
00:19:05,840 --> 00:19:08,080
time.
By rolling from near dated

394
00:19:08,080 --> 00:19:11,240
options into longer dated ones,
you are buying time when

395
00:19:11,240 --> 00:19:14,200
volatility compresses and
selling time when volatility

396
00:19:14,200 --> 00:19:17,440
expands.
Exactly when the stock spikes

397
00:19:17,440 --> 00:19:19,120
implied.
Volatility spikes with it.

398
00:19:19,400 --> 00:19:21,320
That is when you.
Sell shorter dated calls.

399
00:19:21,600 --> 00:19:24,360
When the stock pulls back.
Implied volatility drops.

400
00:19:24,600 --> 00:19:26,320
That is when you.
Buy longer dated calls.

401
00:19:26,520 --> 00:19:29,080
Same exposure, better
positioning there is.

402
00:19:29,080 --> 00:19:32,800
Also a risk mitigation angle
here that often gets missed if

403
00:19:32,800 --> 00:19:35,720
something goes structurally
wrong, a compliance issue

404
00:19:35,720 --> 00:19:37,880
escalates, or dilution
accelerates.

405
00:19:38,080 --> 00:19:40,840
Your maximum loss on options is
predefined.

406
00:19:41,280 --> 00:19:43,240
Equity does not give you that
luxury.

407
00:19:43,840 --> 00:19:45,480
This is where I push back
slightly.

408
00:19:46,080 --> 00:19:50,040
Options decay if the thesis
takes longer than expected.

409
00:19:50,200 --> 00:19:52,720
Repeated roles can quietly erode
capital.

410
00:19:52,960 --> 00:19:55,760
That is a real risk.
Fair, but that is why.

411
00:19:55,760 --> 00:19:57,720
Sizing matters.
Options are not.

412
00:19:57,720 --> 00:20:00,840
Replacing equity here.
They are supplementing it 1%

413
00:20:00,840 --> 00:20:03,400
equity another 1% through
options that keeps decay

414
00:20:03,400 --> 00:20:06,040
manageable.
And expectations matter.

415
00:20:06,280 --> 00:20:09,120
This is not about hitting the
exact top or bottom.

416
00:20:09,560 --> 00:20:12,840
It is about improving the
average outcome over dozens of

417
00:20:12,840 --> 00:20:15,760
decisions.
One bad role does not matter,

418
00:20:15,960 --> 00:20:18,280
the process does.
I can agree with that.

419
00:20:19,040 --> 00:20:22,120
When done systematically,
options can actually reduce

420
00:20:22,120 --> 00:20:24,720
behavioral mistakes.
You are less likely to panic

421
00:20:24,720 --> 00:20:27,640
sell when part of your exposure
is already defined by contract.

422
00:20:27,960 --> 00:20:31,640
And this ties back to asymmetry.
You are not trying to be right

423
00:20:31,640 --> 00:20:34,200
tomorrow, you are positioning so
that if.

424
00:20:34,200 --> 00:20:36,680
The stock rewrite sharply, you
participate.

425
00:20:36,680 --> 00:20:39,240
Meaningfully and if.
It drifts or chops.

426
00:20:39,240 --> 00:20:42,840
You extract value anyway.
That is the edge boring Price

427
00:20:42,840 --> 00:20:46,440
action becomes profitable.
Price action sideways becomes

428
00:20:46,440 --> 00:20:49,440
productive.
Volatility becomes income rather

429
00:20:49,440 --> 00:20:51,680
than stress.
But this only works if the

430
00:20:51,680 --> 00:20:53,520
underlying thesis remains
intact.

431
00:20:54,040 --> 00:20:56,440
Options cannot save a broken
business model.

432
00:20:56,720 --> 00:21:00,480
They only optimize A valid one.
Which brings us to the hardest

433
00:21:00,480 --> 00:21:03,160
part of this entire case study.
Risk.

434
00:21:03,600 --> 00:21:06,040
Not market risk.
Existential risk.

435
00:21:06,560 --> 00:21:09,440
What happens if things go wrong
and how much of that is already

436
00:21:09,440 --> 00:21:12,520
priced in?
This is the segment most shows

437
00:21:12,520 --> 00:21:14,400
avoid.
We are not going to.

438
00:21:14,600 --> 00:21:17,360
If you do not understand how
this fails, you do not

439
00:21:17,360 --> 00:21:20,400
understand the opportunity.
I want to start bluntly.

440
00:21:20,920 --> 00:21:24,840
There is real risk of permanent
capital loss here, not drawdown

441
00:21:25,000 --> 00:21:29,080
loss, delisting, dilution,
structural erosion.

442
00:21:29,520 --> 00:21:31,400
That has to be said clearly.
And this.

443
00:21:31,400 --> 00:21:33,440
Is where people usually panic or
shut down.

444
00:21:33,560 --> 00:21:35,400
They hear those.
Words and assume the trade is

445
00:21:35,400 --> 00:21:36,480
invalid.
That is not how.

446
00:21:36,480 --> 00:21:38,160
Asymmetry works.
Risk.

447
00:21:38,160 --> 00:21:41,160
Existing does not kill upside
mispricing of risk.

448
00:21:41,160 --> 00:21:44,240
Creates upside.
Let us ground this The company

449
00:21:44,240 --> 00:21:46,360
has received a NASDAQ compliance
notice.

450
00:21:46,680 --> 00:21:50,440
The stock must trade above $1.00
for 10 consecutive sessions

451
00:21:50,440 --> 00:21:53,240
before mid-july.
If that does not happen,

452
00:21:53,440 --> 00:21:56,080
management has choices.
None of them are pretty.

453
00:21:56,680 --> 00:21:59,680
A reverse split is the most
likely mechanical solution, and

454
00:21:59,680 --> 00:22:01,680
investors hate reverse splits
for a reason.

455
00:22:02,000 --> 00:22:04,920
They often proceed further
dilution and weak performance.

456
00:22:05,280 --> 00:22:07,240
True.
But the market already knows.

457
00:22:07,240 --> 00:22:10,520
This look at the price, look at
the volatility.

458
00:22:11,280 --> 00:22:13,880
This stock is not priced as a
stable going concern.

459
00:22:14,120 --> 00:22:16,480
It is priced as a question mark.
Exactly.

460
00:22:16,840 --> 00:22:20,320
If this were trading at $3,
delisting risk would be

461
00:22:20,320 --> 00:22:24,560
underappreciated at $0.78.
It is front and center that

462
00:22:24,560 --> 00:22:27,560
distinction matters.
Let us talk dilution.

463
00:22:28,000 --> 00:22:30,880
Share count has exploded.
Capital raises have been

464
00:22:30,880 --> 00:22:33,240
aggressive.
That destroys per share value

465
00:22:33,240 --> 00:22:35,720
and credibility.
Why should investors believe

466
00:22:35,720 --> 00:22:38,000
this stops?
Because capital cycles.

467
00:22:38,000 --> 00:22:41,080
Turn when hardware demand
returns and self mining.

468
00:22:41,080 --> 00:22:43,920
Stabilizes cash flow.
Equity issuance becomes less

469
00:22:43,920 --> 00:22:45,960
attractive.
The company has already

470
00:22:45,960 --> 00:22:47,640
signalled this with buyback
language.

471
00:22:48,040 --> 00:22:50,800
Words matter less than behavior,
but signals matter.

472
00:22:51,160 --> 00:22:55,120
I will add nuance here.
Dilution is not binary.

473
00:22:55,240 --> 00:22:58,600
It is not good or bad.
It depends on what you buy with

474
00:22:58,600 --> 00:23:00,960
it.
If dilution funds unprofitable

475
00:23:00,960 --> 00:23:05,160
survival, it destroys value.
If it funds an EPS inflection,

476
00:23:05,160 --> 00:23:08,000
it creates value.
That assumes the inflection

477
00:23:08,000 --> 00:23:10,400
arrives.
And that is where Bitcoin enters

478
00:23:10,400 --> 00:23:12,840
the conversation.
This company is still deeply

479
00:23:12,840 --> 00:23:15,200
exposed to Bitcoin price and
mining economics.

480
00:23:15,480 --> 00:23:17,320
A major drawdown changes
everything.

481
00:23:17,600 --> 00:23:20,640
Yes, and that is why this is not
a buy and forget investment.

482
00:23:20,640 --> 00:23:22,920
This is a monitored position if
Bitcoin.

483
00:23:22,920 --> 00:23:26,120
Collapses and stays low.
The thesis weakens materially.

484
00:23:26,360 --> 00:23:30,400
But again, look at expectations.
The stock is trading as if those

485
00:23:30,400 --> 00:23:33,000
risks will play out, not as if
they might.

486
00:23:33,440 --> 00:23:37,280
That is the asymmetry I want to
challenge, that some risks are

487
00:23:37,280 --> 00:23:39,800
existential.
DE leasing to OTC can

488
00:23:39,800 --> 00:23:42,720
permanently reduce liquidity and
institutional interest.

489
00:23:42,880 --> 00:23:44,880
That damage is not always
reversible.

490
00:23:45,120 --> 00:23:48,120
I agree, and that is why
position sizing matters more

491
00:23:48,120 --> 00:23:50,360
than conviction.
You do not bet your future on

492
00:23:50,360 --> 00:23:52,840
this.
You allocate one percent, 2%

493
00:23:52,840 --> 00:23:55,000
with options.
Enough to matter, not enough to

494
00:23:55,000 --> 00:23:57,560
kill you.
This is where we find alignment.

495
00:23:58,120 --> 00:24:01,560
The risk is real, but it is
bounded by size and structure.

496
00:24:02,000 --> 00:24:05,400
You are not forced to be all in
to benefit from being right.

497
00:24:06,120 --> 00:24:08,880
And importantly, the company
does not need perfection to

498
00:24:08,880 --> 00:24:12,160
justify upside.
It needs survival plus

499
00:24:12,160 --> 00:24:15,200
competence.
That is a much lower bar than

500
00:24:15,200 --> 00:24:17,320
dominance.
Survival is the first RE.

501
00:24:17,320 --> 00:24:20,080
Rating not greatness.
If the market shifts from

502
00:24:20,080 --> 00:24:23,520
pricing bankruptcy to pricing
continuity, multiples expand

503
00:24:23,520 --> 00:24:25,520
fast.
That is the key insight.

504
00:24:25,960 --> 00:24:28,640
Most of the upside comes before
everything looks good.

505
00:24:28,880 --> 00:24:32,080
By the time earnings are clean
and headlines are positive, the

506
00:24:32,080 --> 00:24:35,440
price has already moved.
So the disagreement resolves

507
00:24:35,440 --> 00:24:37,840
here.
The risks are serious, they must

508
00:24:37,840 --> 00:24:40,920
be respected, but they are also
the reason the opportunity

509
00:24:40,920 --> 00:24:44,240
exists at all.
And with that clarity, we can

510
00:24:44,240 --> 00:24:47,440
now do the math.
Not fantasy math, conditional

511
00:24:47,440 --> 00:24:49,960
math.
If these things happen, this is

512
00:24:49,960 --> 00:24:52,680
what the outcome looks like.
Now we do the part that makes

513
00:24:52,680 --> 00:24:55,360
people uncomfortable.
We translate narrative into

514
00:24:55,360 --> 00:24:59,240
numbers, not price targets
pulled from the air conditions.

515
00:24:59,280 --> 00:25:02,320
This is where fantasy usually.
Sneaks in, so we're going to be

516
00:25:02,320 --> 00:25:04,760
very explicit.
Four times in one year is not

517
00:25:04,760 --> 00:25:07,280
magic.
It's repricing. 12 times in five

518
00:25:07,280 --> 00:25:09,560
years is not hype, it's
compounding plus multiple

519
00:25:09,560 --> 00:25:12,160
expansion.
Let us anchor reality first.

520
00:25:12,720 --> 00:25:17,360
The stock closed at 0.7888.
Market cap is depressed.

521
00:25:17,640 --> 00:25:21,760
Expectations are extremely low.
That matters more than absolute

522
00:25:21,760 --> 00:25:24,200
fundamentals for the one year
case.

523
00:25:24,200 --> 00:25:27,240
The market does not need to
believe in AI dominance or

524
00:25:27,240 --> 00:25:30,560
global compute leadership.
It needs to believe in three

525
00:25:30,560 --> 00:25:33,640
things.
Only continued revenue, balance

526
00:25:33,640 --> 00:25:36,840
sheet survival and a credible
path to positive earnings.

527
00:25:36,920 --> 00:25:38,960
Exactly.
If the market stops pricing

528
00:25:38,960 --> 00:25:42,320
delisting and starts pricing
continuity, the multiple changes

529
00:25:42,320 --> 00:25:45,040
immediately.
Not slowly, immediately.

530
00:25:45,240 --> 00:25:48,000
Walk the listeners through that.
What is 4 times actually?

531
00:25:48,000 --> 00:25:51,720
Assume four times from here
implies a price around 3 to 4

532
00:25:51,720 --> 00:25:54,400
dollars.
That sounds dramatic, but

533
00:25:54,400 --> 00:25:57,200
historically this company has
traded above that level when

534
00:25:57,200 --> 00:26:00,520
fear receded, even briefly.
This is not a new valuation

535
00:26:00,520 --> 00:26:04,080
regime, it is a return to prior
ranges under less hostile

536
00:26:04,080 --> 00:26:06,000
conditions.
And you do not.

537
00:26:06,000 --> 00:26:09,280
Need full profitability?
You need narrowing losses,

538
00:26:09,920 --> 00:26:12,440
improving gross margins.
Evidence that.

539
00:26:12,440 --> 00:26:15,280
Dilution pressure is slowing.
Those are enough for traders.

540
00:26:15,640 --> 00:26:18,600
So the one year move is mostly
about perception shifting from

541
00:26:18,600 --> 00:26:21,000
terminal to transitional
correct.

542
00:26:21,320 --> 00:26:24,600
The one year move is not about
being right long term, it is

543
00:26:24,600 --> 00:26:28,040
about the market realizing it
was too pessimistic short term.

544
00:26:28,160 --> 00:26:30,560
That's so serious.
That is why this trades with

545
00:26:30,560 --> 00:26:34,320
high ADR 8% daily.
Range is not noise, it is

546
00:26:34,320 --> 00:26:36,320
uncertainty being repriced in
real time.

547
00:26:36,800 --> 00:26:39,640
Now let us talk 5 years.
This is where discipline

548
00:26:39,640 --> 00:26:43,360
matters. 12 times does not come
from hope, it comes from

549
00:26:43,360 --> 00:26:46,760
structural change.
The five year path assumes 3

550
00:26:46,760 --> 00:26:50,000
layers of execution.
First, hardware margins

551
00:26:50,000 --> 00:26:52,200
normalize through vertical
integration.

552
00:26:52,560 --> 00:26:55,480
Second, self mining stabilizes
cash flow.

553
00:26:55,880 --> 00:26:59,400
Third, non Bitcoin compute
revenue grows into a meaningful

554
00:26:59,400 --> 00:27:02,720
share of the business.
The moment AI hosting or energy

555
00:27:02,720 --> 00:27:06,320
adaptive compute becomes a real
revenue line, this stops being

556
00:27:06,320 --> 00:27:09,520
valued as a minor proxy that is
the multiple unlock.

557
00:27:09,880 --> 00:27:13,000
Put numbers on that today the
company is valued like a

558
00:27:13,000 --> 00:27:16,680
cyclical vendor, single digit
multiples on depressed earnings.

559
00:27:17,040 --> 00:27:20,960
In five years, if 40% of revenue
is recurring or service based,

560
00:27:21,240 --> 00:27:23,880
the market assigns a completely
different multiple.

561
00:27:23,960 --> 00:27:27,120
Not because it is generous,
because comparables change.

562
00:27:27,560 --> 00:27:28,680
That is the RE.
Rating.

563
00:27:28,680 --> 00:27:31,800
Same revenue, same company,
different bucket.

564
00:27:32,360 --> 00:27:35,400
And the earnings base is larger
by then, so the multiple

565
00:27:35,400 --> 00:27:37,280
expansion compounds on top of
growth.

566
00:27:37,720 --> 00:27:41,560
Exactly that is how 12 times
happens without hero

567
00:27:41,560 --> 00:27:44,480
assumptions.
It is not one miracle, it is

568
00:27:44,480 --> 00:27:47,480
several normal steps executed
without disaster.

569
00:27:47,560 --> 00:27:50,280
Which brings us back to risk.
If any one of those steps fails,

570
00:27:50,280 --> 00:27:53,320
the five year path weakens.
That does not invalidate the one

571
00:27:53,320 --> 00:27:53,960
year.
Trade.

572
00:27:54,200 --> 00:27:55,240
These are layered.
Bets.

573
00:27:55,240 --> 00:27:58,320
Not a single bet.
I like that framing listeners

574
00:27:58,320 --> 00:28:01,920
often confuse time horizons.
You can trade the repricing and

575
00:28:01,920 --> 00:28:03,640
still evaluate the long term
story.

576
00:28:03,640 --> 00:28:06,280
Honestly, that is the core
lesson.

577
00:28:06,560 --> 00:28:10,640
You do not need certainty.
You need asymmetry, limited

578
00:28:10,640 --> 00:28:14,000
downside through sizing, large
upside through mispricing.

579
00:28:14,280 --> 00:28:17,040
And you need patience to let
boring price action do its job.

580
00:28:17,400 --> 00:28:19,880
Most of the time nothing
happens, then suddenly

581
00:28:19,880 --> 00:28:22,360
everything does.
Which sets us up for the final

582
00:28:22,360 --> 00:28:24,640
segment.
How to actually approach a stock

583
00:28:24,640 --> 00:28:27,720
like this in practice without
blowing yourself up or getting

584
00:28:27,720 --> 00:28:30,080
shaken out?
This is where everything comes

585
00:28:30,080 --> 00:28:32,680
together.
Not the story, not the target,

586
00:28:32,960 --> 00:28:36,080
the behavior.
Because most people do not lose

587
00:28:36,080 --> 00:28:39,440
money because they are wrong.
They lose money because they

588
00:28:39,440 --> 00:28:42,240
cannot hold a position the way
it needs to be held.

589
00:28:42,520 --> 00:28:44,000
Especially with a stock like
this.

590
00:28:44,440 --> 00:28:49,080
High ADR, constant news,
delisting, headlines, dilution,

591
00:28:49,080 --> 00:28:50,960
fear.
If you treat this like a normal

592
00:28:50,960 --> 00:28:52,240
investment, it will.
Break you?

593
00:28:52,600 --> 00:28:55,840
So let us be very concrete, how
would someone actually engage

594
00:28:55,840 --> 00:28:58,280
with this without turning it
into a stress test?

595
00:28:58,480 --> 00:29:03,560
First rule, position size is the
risk control 1%, equity exposure

596
00:29:03,960 --> 00:29:05,800
2%.
If you use options and

597
00:29:05,800 --> 00:29:09,160
understand delta, that is it.
If you need more to feel

598
00:29:09,160 --> 00:29:10,920
something, you are already
wrong.

599
00:29:11,320 --> 00:29:14,080
Second rule, you do not chase
strength.

600
00:29:14,600 --> 00:29:16,360
This is not a momentum.
Stock.

601
00:29:16,560 --> 00:29:18,440
You buy.
Volatility you sell.

602
00:29:18,440 --> 00:29:20,480
Volatility you let.
Price come to you.

603
00:29:21,160 --> 00:29:23,400
This is where the ADR framework
matters.

604
00:29:23,880 --> 00:29:28,120
Exactly when the stock moves up
a full ADR, you trim when it.

605
00:29:28,120 --> 00:29:30,160
Retraces to half ADR, you add
or.

606
00:29:30,160 --> 00:29:34,000
Roll not emotionally.
Mechanically, this turns chaos

607
00:29:34,000 --> 00:29:36,720
into a process.
And options are not for leverage

608
00:29:36,720 --> 00:29:40,080
here, they are for time.
Selling, near term calls into

609
00:29:40,080 --> 00:29:43,920
strength, buying longer dated
calls on pull backs, extending

610
00:29:43,920 --> 00:29:46,040
duration without increasing
exposure.

611
00:29:46,520 --> 00:29:47,960
That is an important
distinction.

612
00:29:48,320 --> 00:29:51,360
You are not betting more, you
are staying in the game longer.

613
00:29:51,680 --> 00:29:53,520
Which is how you survive boring
periods.

614
00:29:53,720 --> 00:29:55,360
And boring is where.
The edge lives.

615
00:29:55,920 --> 00:29:59,920
Let us also address the elephant
in the room, delisting risk.

616
00:30:00,400 --> 00:30:02,680
This is not ignored, it is
priced.

617
00:30:03,120 --> 00:30:06,360
That is why the stock is here,
and that is also why the upside

618
00:30:06,360 --> 00:30:09,000
exists.
If the stock clears $1.00 and

619
00:30:09,000 --> 00:30:12,240
holds, the entire narrative
shifts, not gradually,

620
00:30:12,520 --> 00:30:14,920
immediately.
If it does not and they.

621
00:30:14,920 --> 00:30:18,160
Reverse split you reassess.
You do not argue.

622
00:30:18,160 --> 00:30:20,520
With reality, you reduce or
exit.

623
00:30:21,120 --> 00:30:23,360
This is not marriage.
It is a trade with a.

624
00:30:23,360 --> 00:30:26,560
Long option attached.
That is the make money mindset.

625
00:30:26,920 --> 00:30:29,800
You are not predicting, you are
preparing.

626
00:30:30,240 --> 00:30:33,400
If this survives and executes,
you participate.

627
00:30:33,680 --> 00:30:38,440
If it fails, your size protects
you and over five years, if the

628
00:30:38,440 --> 00:30:41,720
company transitions, the way we
outlined the math does the work.

629
00:30:42,400 --> 00:30:46,800
You do not need perfect timing,
you need exposure and patience.

630
00:30:46,960 --> 00:30:49,680
Most people miss 12 times.
Returns because they want

631
00:30:49,680 --> 00:30:52,200
certainty first.
Certainty comes last.

632
00:30:52,400 --> 00:30:55,080
So the take away is simple.
This is not a stock you fall in

633
00:30:55,080 --> 00:30:57,520
love with.
It is a stock you respect, you

634
00:30:57,520 --> 00:31:00,920
size it correctly, you trade
around it intelligently, and you

635
00:31:00,920 --> 00:31:03,240
let time and structure decide
the outcome.

636
00:31:03,840 --> 00:31:06,800
If you learn how to handle 1
stock like this, you can handle

637
00:31:06,800 --> 00:31:09,480
many.
The path is different, the

638
00:31:09,480 --> 00:31:12,440
discipline is the same.
That is the real lesson of this

639
00:31:12,440 --> 00:31:15,800
episode.
Not Canaan specifically, but how

640
00:31:15,800 --> 00:31:20,000
asymmetric returns are actually
built quietly, methodically,

641
00:31:20,320 --> 00:31:22,960
before the crowd notices.
If this episode gave you an

642
00:31:22,960 --> 00:31:26,160
edge, here's your next move.
Subscribe to our newsletter for

643
00:31:26,160 --> 00:31:27,560
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644
00:31:27,560 --> 00:31:30,360
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645
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647
00:31:35,720 --> 00:31:38,840
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648
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650
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651
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654
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657
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658
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659
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660
00:32:16,880 --> 00:32:19,120
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661
00:32:19,120 --> 00:32:21,400
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662
00:32:21,400 --> 00:32:23,240
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663
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665
00:32:28,880 --> 00:32:31,840
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666
00:32:32,120 --> 00:32:34,200
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667
00:32:34,200 --> 00:32:36,400
Stay focused.
Keep building, we will see you

668
00:32:36,400 --> 00:32:38,920
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669
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670
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