Chinese mining giant Canaan doubles profits despite blanket crypto ban
Chinese mining giant Canaan doubles profits despite blanket crypto ban
Canaan’s profits rise in 2022 despite China’s crackdown on crypto and the effects of the pandemic
By Shashank Bhardwaj
Image: Shutterstock
China has cracked down on crypto this year, but Chinese miner Canaan has no problems and continues to grow. According to their announcement, they have experienced a 117 percent increase in gross profit from the same period in 2021. Their Q2 profit amounted to 930 million renminbi (RMB), or approximately $139 million. The organization’s net income for the second quarter was RMB 608 million, (or US$91 million), a marked jump of 149 percent from RMB 425 million in the same period last year.
Despite the impressive numbers, CEO Nangeng Zhang said that the second quarter of 2022 has been a difficult period due to the falling crypto prices and the general negative sentiments in the market. Among those struggles, he also noted, “The Covid-19 lockdown in key cities in China also led to severe disruptions to our daily operations and the demand for our AI chips.”
However, the company shows no signs of slowing down and is reportedly working to expand its global presence, starting with establishing international headquarters in Singapore. They are also working on scaling their mining operations to generate more BTC with a better power supply.
In June, Canaan was reported to have 346.84 BTC, worth around $8.1 million. Zhang noted: “We are fully aware of the downward pressure on the Bitcoin price since the last fourth quarter and expect it to provide long-term headwinds to our performance in the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its long-term prospects.” »
Chief Financial Officer James Jin Cheng also seems to be on the same page that Canaan is bound to encounter problems with the general state of the market as well as the uncertainty caused by the pandemic and the geopolitical environment. He says: “When the Bitcoin price dropped further in the second quarter, we responsively lowered the product price for spot sales to bear the pressure with our customers. […] We expect the gross margin to decrease dramatically in the second half of this year.”
People call it the “crypto winter” and the Chinese investors and companies will face the brunt of it as China’s blanket ban on crypto operations in September 2021 complicates things even more. Although this “big Chinese crypto ban” has forced many companies out of business or fleeing to establish bases in other countries, China still stands as the second largest Bitcoin mining country in January 2022. China hosts 21 percent of global Bitcoin -hash rate, surpassed only by the United States, which produces 38 percent.
Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
