Chinese Mining Giant Canaan Doubles Profits Despite Blanket Crypto Ban

Chinese Mining Giant Canaan Doubles Profits Despite Blanket Crypto Ban

Leading Chinese cryptocurrency mining manufacturer Canaan appears to have no problem with the local cryptocurrency ban as the company’s overall performance has continued to grow in 2022.

Canaan officially announced the financial results for the second quarter of 2022 on Thursday, reporting a 117% increase in gross profit over the same period in 2021. According to the company, the second quarter profit amounted to 930 million renminbi (RMB). , or nearly $139 million.

The company’s net income in the second quarter was RMB 608 million, or US$91 million, or an increase of 149% from RMB 425 million in the same period last year. Canaan noted that the foreign currency translation adjustment in the second quarter was a gain compared to previous losses due to the appreciation of the US dollar against the RMB during the second quarter.

Despite posting significant gains, Canaan found the second quarter to be a challenging period as Bitcoin (BTC) plummeted below $20,000 in June, company CEO Nangeng Zhang said.

“The COVID-19 containment lockdown in key cities in China has also caused severe disruption to our daily operations and demand for our AI chips,” it noted.

Zhang mentioned that Canaan has been expanding its global presence, particularly establishing an international headquarters in Singapore. The firm has also been working to scale its mining business, generating more BTC with an improved power supply. At the end of June, Canaan held a total of 346.84 BTC, or $8.1 million, the CEO said, adding:

“We are fully aware of the downward pressure on the price of Bitcoin since the last fourth quarter and we expect it to bring prolonged headwinds to our performance in the coming quarters. However, we believe in the unique value of Bitcoin and its long-term prospects.”

Canaan CFO James Jin Cheng echoed the CEO’s comments, stating that the company expects a tougher market environment due to the lower level of Bitcoin prices, as well as an increase in the price of Bitcoin. energy and various geopolitical and pandemic uncertainties. He stated:

“As the price of Bitcoin declined further in the second quarter, we reduced the price of our product for spot sales in response to withstand the pressure with our clients. […] We expect gross margin to decline sharply in the second half of this year.”

However, the ongoing crypto winter is not the only concern for crypto mining companies in China. As previously reported, China announced a blanket ban on all crypto operations, including mining and trading, in September 2021, prompting many companies to force global expansion and flee to other countries. Before the ban, China was dismantling multiple crypto mining farms in a move to save energy and curb crypto operations in the country.

Related: Bitcoin mining revenue jumps 68.6% from lowest earning day of 2022

Apparently, the “great Chinese crypto ban” hasn’t affected local crypto enthusiasts and businesses too much until China re-emerged as the second largest Bitcoin mining country in January 2022. According to data from the Cambridge Bitcoin Electricity Consumption Index, China still hosts 21% of the total global Bitcoin hash rate, only following the United States, which produces 38%.