Chinese mining giant Canaan doubles profits despite the blanket crypto ban

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The Chinese major crypto maker Canaan does not seem to have any issues with the domestic ban on cryptocurrencies, as the company’s overall performance continues to grow in 2022.

Canaan Corporation officially announced its financial results for the second quarter of 2022 on Thursday, posting an 117% increase in gross profit over the same period in 2021. According to the company, second-quarter profit was 930 million renminbi (RMB), or roughly $139. American. million.

The company’s second-quarter net income was CNY 608 million, or $91 million, or a 149% increase from CNY 425 million in the same period last year. Kanaan noted that the foreign exchange conversion adjustment in the second quarter was income compared to the previous losses due to the rise of the US dollar against the renminbi during the second quarter.

The company’s CEO, Nanjing Zhang, said that despite the big profits, Canaan found the second quarter to be a difficult period due to Bitcoin (BTC) dropping below $20,000 in June.

“The COVID-19 containment shutdown in major cities in China has also caused severe disruptions to our daily operations and demand for our AI chips,” he noted.

Chang noted that Canaan is expanding its global presence, in particular establishing an international headquarters in Singapore. The company is also expanding its mining business, generating more BTC while improving its power supply. In late June, Canaan had a total of 346.84 BTC, or $8.1 million, the CEO said, adding:

“We are fully aware of the downward pressure in the bitcoin price since Q4 and expect it to bring long-term headwinds to our performance in the coming quarters. However, we believe in the unique value of bitcoin and its long-term prospects.”
Canaan’s chief financial officer, James Jin Cheng, echoed the CEO’s remarks, noting that the company expects a tougher market environment from a lower Bitcoin price level as well as increased energy prices, various pandemics and geopolitical uncertainties. He said:

“As the price of bitcoin fell further in the second quarter, we have lowered the price of our spot sales products to withstand the pressure with our customers. […] We expect gross margin to decline significantly in the second half of this year.”
However, the ongoing crypto winter is not the only concern of 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. Prior to the ban, China was removing several crypto mining farms in a move to save energy and curb crypto operations in the country.

Related: Bitcoin Mining Revenue Jumps 68.6% on Lowest Profit Day of 2022

Apparently, the “great Chinese crypto ban” has not affected crypto enthusiasts and local businesses much so far as China re-emerged as the second largest Bitcoin mining country by January 2022. According to data from the Cambridge Bitcoin Electricity Consumption Index, China still hosts 21% Of the total global bitcoin hash rate, only the United States, which produces 38%.

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