20-F: Nano Labs Ltd Reports Annual Results for 2024, Navigating Cryptocurrency Volatility and Regulatory Changes

Nano Labs Ltd's 2024 annual report reveals a company navigating the volatile cryptocurrency market and evolving regulatory landscape in China, with a focus on Web 3.0 infrastructure and product solutions.

Summary

• Nano Labs Ltd, a Cayman Islands holding company, primarily conducts its operations in China through its subsidiaries.
• The company focuses on Web 3.0 infrastructure and product solutions, including HTC and HPC chips.
• In 2024, Nano Labs reported a net loss of RMB119.5 million (US$16.6 million), a decrease from the net loss of RMB254.4 million in 2023.
• The company experienced negative cash flows from operating activities of RMB139.3 million (US$19.4 million) in 2024.
• Revenues decreased significantly due to the Ethereum Mainnet's transition to proof-of-stake and fluctuations in cryptocurrency prices.
• The company is expanding its business in overseas IC markets due to regulatory developments in China.
• Nano Labs has established Bitcoin value investment and adopted Bitcoin as primary reserve asset, holding approximately 401 Bitcoins as of April 10, 2025.
• The company identified a material weakness in its internal control over financial reporting related to a lack of sufficient accounting personnel with U.S. GAAP knowledge.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company is taking steps to address challenges and expand its business, the financial results are weak and there are significant risks associated with the company's operations and the cryptocurrency market.

Positives

• The company's net loss decreased in 2024 compared to 2023.
• The company is expanding its business in overseas IC markets due to regulatory developments in China.
• The company has established Bitcoin value investment and adopted Bitcoin as primary reserve asset.
• The company is implementing measures to address the identified material weakness in internal control over financial reporting.

Negatives

• The company experienced a net loss and negative cash flows from operating activities in 2024.
• Revenues decreased significantly due to the Ethereum Mainnet's transition to proof-of-stake and fluctuations in cryptocurrency prices.
• The company identified a material weakness in its internal control over financial reporting related to a lack of sufficient accounting personnel with U.S. GAAP knowledge.

Risks

• The company's results of operations are significantly impacted by the volatility of the cryptocurrency market.
• The company relies on a limited number of third parties for IC packaging and testing services.
• The company faces risks associated with the expansion of its business operations overseas.
• The company may be unable to price its products at its desired margins due to market conditions.
• The PRC government has significant authority to intervene or influence the company's operations.
• The company's Class A ordinary shares will be delisted and prohibited from trading in the over-the-counter market under the Holding Foreign Companies Accountable Act, if the PCAOB is unable to inspect or investigate completely auditors located in China for two consecutive years.

Future Outlook

The company intends to grow its business by expanding its sales network and operations internationally beyond China and broaden its product offerings to design and develop solutions covering more application scenarios, including vision computing and privacy computing.

Industry Context

The company operates in the highly competitive fabless IC design market, facing competition from companies with larger market share, greater brand recognition, and broader international customer base.

Comparison to Industry Standards

• The document mentions Frost & Sullivan (F&S) report, an independent research firm, to provide information regarding the company's industry and market position in China.
• The company's Cuckoo 1.0 was one of the first commercialized Grin mining ASIC chips in the world, according to the F&S report.
• The company's Cuckoo 2.0 is the largest HTC chip in the world, according to the F&S report.
• The company's iPollo V1 has an energy consumption of 0.86 W/MHash, significantly lower than other Ethereum mining machines on the market, according to the F&S report.

Legal Proceedings

• A customer filed a civil action against one of the company's subsidiaries for a sales contract dispute, claiming the contract should be annulled and demanding a return of payment of RMB2,973,600 with related interests.

Related Party Transactions

• In 2023 and 2024, Jianping Kong and Qifeng Sun provided guarantee for the company's debts and provided interest-free loans to the company which were subsequently converted into Class A ordinary shares.

Stakeholder Impact

• Shareholders may experience volatility in the trading price of the company's Class A ordinary shares.
• Shareholders may face difficulties in protecting their interests due to the company's incorporation in the Cayman Islands and operations primarily in China.
• Customers may be affected by the company's ability to maintain product quality and timely delivery.
• Employees may be affected by the company's ability to recruit and retain key personnel.

Next Steps

• The company intends to grow its business by expanding its sales network and operations internationally beyond China.
• The company plans to broaden its product offerings to design and develop solutions covering more application scenarios, including vision computing and privacy computing.
• The company intends to implement measures to improve its internal control over financial reporting to address the material weakness identified.

Key Dates

Keywords

Nano Labs, cryptocurrency, HPC, HTC, IC design, blockchain, China, financial results, annual report, Web 3.0