Valuing the firm at ¥3bn (approximately $430m), the Series A round saw the participation of Jin Jiang International Group, Baopu Asset Management and Tunlan Investment.
The investment is the largest-ever announced by a bitcoin mining business, though one that's in line with moves from Canaan's competitors. One of the largest makers of ASIC chips specialized for mining, the firm's diversification follows competitor Bitfury's transition into software services and pursuits centered on enterprise blockchain offerings.
For Canaan, however, the funding will serve as a means to facilitate the exploration of computing chips for use in artificial intelligence (AI) applications, and potentially, into hardware solutions for alternative cryptocurrencies that require different chips to optimize the mining process.
Spokesperson Steven Mosher told CoinDesk:
"We are also looking at other currencies and other places where we can apply that capital. We can apply it to big data, we can apply it in AI or in IoT."
According to Mosher, the company believes AI will provide the most fertile ground for the Canaan's expansion, and he projected that the returns could be "as good as" the company's earnings from mining chip sales. Further, he suggested that given the interest in intersections between the two industries there could be "synergy down the road".
Mosher also hinted at other products aimed at alternative cryptocurrencies.
"We have new products in the pipeline both on the proof-of-work side of things, and also around the whole blockchain ecosystem," he said.
Such diversification is not uncommon these days, as many mining pools, for example, offer software that enables mining computers to coordinate in the race to secure various blockchains and compete for their rewards.
However, it's notable that the shift comes during a time when the alternative cryptocurrency markets have emerged as one of the more active areas of ecosystem growth.
So far in 2017, the combined value of all public cryptocurrencies, bitcoin included, has swelled 180%, rising to $51bn from roughly $18bn at the start of the year, according to data provider Coinmarketcap. If that sounds high, however, the market capitalization of all cryptocurrencies excluding bitcoin has seen even more robust growth.
The value of these assets, including popular alternatives like litecoin and ether has risen to $22bn, up from just over $2bn at the end of 2016.
Mosher, however, stopped short of characterizing the strategy as one that means the company is diversifying away from bitcoin. In part, Mosher said this is because there is a natural upward bound on how much mining firms can make in the bitcoin ecosystem alone.
As an example, he cited the fact that mining chip producers have to strike a tricky balance between hardware sales and deploying those chips themselves in data centers for the purposes of securing the bitcoin blockchain.
"If you create more hashing power, you're competing against the other side of your business," he explained. "You're making money from your customers, but you're hurting [your] mining operation [by raising bitcoin's difficulty calculations]."
Canaan, for its part, only makes chips and doesn't use them in mining data centers, as do competitors Bitfury and Bitmain.
Mosher said he expects more bitcoin miners to follow this path due to the fact that the business is lucrative enough to fund other efforts. (A study by the Cambridge Centre for Alternative Finance, for instance, projected that more than $2bn has been earned from mining since the network began running in 2008).
"We're all making money on the main chain and the question is, what are we doing with that money?" Mosher said. "Blockchain has been so good, such a great opportunity, and it throws off a good amount of cash, it's about staying strong and robust."
The funding also follows a time of transition for the company, which was nearly acquired by electrical equipment maker Shandong Luyitong Intelligent Electric in 2016 in what would have been the industry's largest-ever acquisition if completed.
At the time, Shandong Luyitong was said to have offered ¥3.06bn to acquire 100% ownership of the firm in a move that would have made the combined entity a publicly traded company. The sale was ultimately blocked in September of that year by the Shenzhen Stock Exchange due to "uncertainties", though not ones that reportedly stemmed from its bitcoin activities.
In statements, Mosher still described the Series A as a "pre-IPO" round, though he stopped short of providing any further details.
If pursued, Canaan would be one of the first bitcoin startups to IPO in the traditional market, a strategy that was also put forward by Bitfury CEO Valery Vavilov in 2014.
Image courtesy of Canaan