Canaan (NASDAQ: CAN), a prominent player in the Bitcoin mining hardware space, has been initiated with a Buy rating by Benchmark analyst Mark Palmer, who set a $3 price target — nearly a 5x upside from its current trading level of $0.62. Despite the stock’s 72% drop year-to-date, Palmer sees significant growth potential in the company.

Canaan is focused on two core areas: the development and sale of ASIC bitcoin chips and mining rigs, as well as expanding its self-mining operations. Palmer believes the company’s vertically integrated strategy positions it uniquely to capture revenue from both hardware sales and its own mining efforts.

The firm has also ventured into the consumer market with home mining rigs, further diversifying its revenue streams. Palmer pointed to this diversification as a key growth factor.

While self-mining currently accounts for just 16.3% of its revenue, Canaan plans to boost its mining capacity to 10 EH/s in North America and 15 EH/s globally by mid-2025.

In addition, Canaan holds 1,408 BTC, worth approximately $133 million, which Palmer notes could act as a stabilizing asset for the company’s valuation.