Nano Labs Ltd Annual Report: A Plain-English Guide

I’ve put together this guide to help you understand Nano Labs Ltd’s latest annual report. My goal is to cut through the corporate jargon and explain how the business is performing, the risks involved, and where it might be headed.

1. The Big Picture

Nano Labs designs high-performance computer chips. Think of them as "engine builders" for the cryptocurrency world. They create specialized hardware, like ASIC chips, used to power mining operations for Bitcoin and other digital currencies.

The company is currently navigating a period of structural change, including share consolidations to maintain its Nasdaq listing and a shift in voting power to keep decision-making centralized within its leadership team.

2. The Numbers

The company has managed its capital through two major "share consolidations": a 2-for-1 split in February 2024 and a 10-for-1 split in November 2024.

These moves were executed to keep the stock price above the $1.00 minimum required by the Nasdaq. By reducing the number of shares, the company effectively adjusted its share price to remain compliant with exchange regulations.

3. Ownership and Control

• The "Holding Company" Reality: When you buy Nano Labs stock, you are buying shares in a Cayman Islands company that holds a contract with Chinese operations. You do not hold direct ownership of the underlying Chinese assets; rather, you hold a claim to their potential profits.
• Leadership Control: The company utilizes a dual-class share structure. "Class B" shares carry 50 votes each, while public "Class A" shares carry only one vote. This ensures that the founders retain absolute control over board decisions and company strategy.

4. Financial Health

Selling mining hardware accounts for 98.6% of the company’s revenue. Because the business is heavily tied to crypto market conditions, the company recorded a write-down of RMB 32.6 million on its inventory in 2025, reflecting the reduced market value of its chips.

The "BNB" Bet: Nano Labs maintains a reserve of the cryptocurrency "BNB," currently valued at approximately RMB 15.8 million. The company also utilizes derivatives, which are complex financial instruments that can increase exposure to market volatility.

5. The Risks

• Legal Hurdles: The Cayman Islands and China generally do not enforce U.S. court judgments, which makes legal recourse difficult for international shareholders.
• The "China Factor": Chinese regulators maintain strict control over capital outflows. This may limit the parent company’s ability to access cash generated by its Chinese operations.
• Market Sensitivity: Because the business relies almost entirely on the crypto market, a drop in digital currency prices can lead to a collapse in demand for their hardware and leave the company with outdated, devalued inventory.
• Custody Risk: The company relies on third-party custodians to hold its crypto reserves. If these third parties face bankruptcy or security breaches, the company’s assets could be permanently lost.

6. The Bottom Line for Investors

Nano Labs is a high-risk, high-reward play on the cryptocurrency sector. Its success is tied to two main factors: the company's ability to innovate its chip technology to remain competitive, and the broader, unpredictable price movements of Bitcoin and BNB.

Before investing, consider that you are buying into a structure where you have little influence over management, and your investment is subject to both the volatility of the crypto market and the regulatory complexities of operating across international borders.