Shares of Canaan (CAN -2.74%), a company that manufacturers equipment for mining cryptocurrencies, spiked higher on Wednesday after the company announced a big order from a customer. At 11:30 a.m. EST, the stock was up 11%.
According to a direct communication from a consultant for the company, Canaan has made a big sale to a company called Mawson Infrastructure Group. Mawson Infrastructure is buying 11,760 of Canaan's A1246 ASIC AvalonMiners -- its latest model. These are scheduled to be gradually delivered over the course of 2021.
The terms of the deal weren't disclosed. However, it's safe to assume Canaan will get a good price. This assumption is based on the fact that this isn't old inventory, it's the latest model. Moreover, Canaan has already announced that demand for its mining equipment is very high right now, and announcements from cryptocurrency miners confirm this. In short, this is good news for a mining-rig manufacturer like Canaan.
Canaan stock is still down over 60% from its highs earlier this year. It's not alone -- many cryptocurrency stocks are sharply down from highs. Considering many of these are rebounding some today, it's possible that Canaan isn't trading higher solely because of business fundamentals. It's possible traders are jumping back into stocks like these today.
Whatever the exact reason Canaan stock is up today, one thing I'm more sure of is this: The cryptocurrency space has always been volatile, and it will likely remain that way for some time. Investors in this space need to be mentally prepared for outsize swings higher and lower.