Canaan Inc. Shares Surge 40% on Pilot to Convert Flared Gas for Bitcoin and AI Compute

Executive Summary

Canaan Inc., a prominent bitcoin mining hardware manufacturer, announced a pilot project in collaboration with Aurora AZ Energy in Alberta, Canada. The initiative focuses on converting flared natural gas into a sustainable power source for high-density computing, encompassing both bitcoin mining and artificial intelligence (AI) workloads. This development resulted in a 40% increase in Canaan's share price. The project is designed to deliver approximately 2.5 megawatts of compute power while significantly reducing environmental impact by utilizing gas that would otherwise be wasted.

The Event in Detail

On October 13, 2025, Canaan Inc. unveiled its partnership with Aurora AZ Energy Ltd. for a gas-to-compute initiative in Calgary, Alberta. The project involves deploying a fully integrated system that connects natural gas extraction, power generation, and computing operations within a modular architecture. This deployment includes over $2 million worth of Avalon A15 Pro miners and containerized data modules, installed directly at natural gas wellheads. Aurora AZ Energy's on-site operations are set to convert stranded or flared gas into usable electricity at power costs substantially below industry norms. The installation of 700 Avalon A15 Pro units is expected to provide 2.5 megawatts of computing capacity. Under the agreement, Canaan is guaranteed 90% uptime, with limited exemptions for extreme weather or scheduled maintenance. By utilizing natural gas that would typically be flared, the project anticipates cutting 12,000 to 14,000 metric tons of CO₂-equivalent emissions annually. Nangeng Zhang, CEO of Canaan, stated that this initiative demonstrates the evolution of computing infrastructure alongside energy innovation, transforming previously wasted resources into productive energy.

Market Implications

The announcement triggered a notable market response, with Canaan's shares (CAN) surging 40%. This reflects growing investor interest in companies that are innovating at the intersection of cryptocurrency infrastructure and AI. The project not only diversifies Canaan's operational focus but also positions it within a narrative of environmental responsibility through methane mitigation. Furthermore, the ability to potentially sell excess power back to the grid during periods of curtailment offers an additional revenue stream and enhances the economic viability of the project, demonstrating a dual benefit of resource monetization and environmental stewardship.

Industry Trends and Strategic Positioning

Canaan's pivot towards utilizing flared gas for both bitcoin mining and AI workloads aligns with a broader trend across the energy-intensive computing sector. Several companies previously focused solely on crypto mining are now leveraging their infrastructure for AI and high-performance computing. Examples include Galaxy Digital, which secured $460 million to expand its Helios AI data center, and HIVE Digital Technologies, Core Scientific, and IREN Limited, all transitioning or expanding operations into AI infrastructure. This shift is driven by the potential for attractive returns on investment in AI and the strategic advantage of repurposing existing energy infrastructure. The concept of converting waste gas into compute power, initially pioneered by companies like Crusoe Energy, represents a "new playbook" for energy, finance, and compute, where energy is generated at near-zero marginal cost due to the use of otherwise wasted resources. Studies indicate that flare gas bitcoin mining can reduce CO₂-equivalent emissions by up to 63% compared to traditional flaring methods, and gas engines combust methane more completely than open-air flares, significantly reducing methane emissions, a greenhouse gas far more potent than carbon dioxide.

Broader Context

The global oil and gas industry flares over 140 billion cubic meters of natural gas annually, wasting an estimated $30 billion in potential energy value and releasing over 350 million tonnes of CO₂-equivalent emissions. Canaan's project exemplifies a decentralized approach that provides off-grid, self-sustaining power solutions for compute-intensive workloads, particularly relevant for areas with stranded gas fields and weak grid infrastructure. The economic viability of such flare gas projects is enhanced by carbon pricing, with most projects becoming viable at $40 per ton CO₂ and nearly all at $100 per ton. This emerging infrastructure model transforms waste into valuable compute, positioning "compute as the new oil," and fosters a more energy-aware economy. The strategic integration of bitcoin mining and AI infrastructure via flare gas utilization not only addresses environmental concerns but also unlocks significant economic opportunities by monetizing a previously wasted resource, setting a precedent for future innovations in sustainable computing and energy management.