The bad news continues to mount for Hangzhou-based ASIC hardware maker Canaan Inc. Canaan is embroiled in a lawsuit from a shareholder alleging it misled prospective investors during their NASDAQ initial public offering (IPO). Now the company has reported larger than expected loss during the first quarter of 2020 amid weakening demand for its core product. According to Canaan’s first quarter earnings, the company earned $9.6 million in revenue for the first three months of 2020. This amounts to a growth of 44.6% compared to the same period the previous year. The firm sold 0.9 million terahash per second (TH/s) of ASIC hashpower, up from 0.7 million TH/s during the same period in 2019. Research and development expenses rose to $5.9 million last quarter, while the cost to produce and distribute their product rose to $9.3 million. This lead to the company reporting a net loss of $5.6 million to the U.S. Securities and Exchange Commission (SEC). The unaudited SEC filing also shows that as of March 31, Canaan held cash and cash equivalents of $37 million, down from $71 million at the end of 2019. These earning came despite efforts by Canaan to improve sales by reducing the cost of its ASIC hardware rigs by over 50%. Demand dropped, in part, for the COVID-19 pandemic, which disrupted the supply chain. Another significant factor has been the price stagnation of BTC. Canaan has decided not to issue a business outlook for the second quarter of 2020 due to the uncertainty surrounding the block reward mining sector. Canaan’s immediate future looks bleak. The current bill circulating around congregational halls in the U.S. will stop those listed on U.S. stock exchanges, releasing unaudited financial reports, forcing additional transparency levels on their financial sheets. Government leaders in both nations have ratcheted up protectionist rhetoric that might lead to a fresh round of tariffs. Canaan is not traveling this road alone. It’s safe to assume that other leading China-based ASIC hardware manufacturers are in similar dire financial situations. The factors hurting Canaan’s balance sheets are not unique to them. The sluggish market of BTC and supply chain interruptions impact all those who support the block reward mining sector. Industry insiders are claiming Bitmain privately say they are generating $300 million Q1 earnings despite the market conditions. An independent auditor has not validated the boasts. Just recently, Bitmain downsized its workforce as their cofounder publicly battle for control of the company. There was even a report that Bitmain lost its Beijing business license. Regardless of the rumors, public filings are where companies signal to the market there financial well-being. The negative factors surrounding the block reward mining sector do not bode well enough for participants in this sector to look forward to a profitable 2020.