The leading Chinese manufacturer of cryptocurrency miners, Canaan appears to have no problem with the local crypto ban as the company’s overall performance has continued to grow in 2022.
Canaan officially announced second quarter 2022 financial results on Thursday, reporting a 117% increase in gross profit over the same period in 2021. According to the firm, second-quarter profit amounted to 930 million renminbi (RMB), or nearly $139 million.
The company’s net income in Q2 was RMB 608 million, or US$91 million, up 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, versus previous losses, due to the appreciation of the US dollar against the RMB during the second quarter.
Despite posting significant profits, the second quarter has been a difficult period for Canaan as Bitcoin (BTC) plunged below $20,000 in June, company CEO Nangeng Zhang said.
“The COVID-19 containment shutdown in key cities in China has also brought severe disruption to our daily operations and demand for our AI chips”he pointed.
Zhang mentioned that Canaan has been expanding its global presence, in particular establishing an international headquarters in Singapore. The firm has also been working to scale its mining business, generating more BTC with better 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 present prolonged headwinds for our performance in the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its future prospects. long term.”
Canaan’s CFO, James Jin Cheng, echoed the CEO’s remarks, stating that the company expects a tougher market environment due to the lower price level of Bitcoin, as well as the increase in the price of energy and various pandemic and geopolitical uncertainties.. He claimed:
“As the price of Bitcoin continued to decline in the second quarter, we reduced the price of our products in spot sales to withstand pressure from our clients. […] We expect gross margin to decline sharply in the second half of this year.”
However, the current crypto winter is not the only concern for crypto mining companies in China. As previously reported, China announced a blanket ban on all cryptocurrency operations — including mining and trading — in September 2021, pushing many companies to force global expansion and flee to other countries.. Before the ban, China was shutting down multiple cryptocurrency mining farms in a move to save energy and curb cryptocurrency operations in the country.
Apparently, the “great Chinese crypto ban” hasn’t affected local crypto enthusiasts and businesses too much so far, as China re-emerged as the second largest Bitcoin mining country in January 2022. According to data from the Cambridge Bitcoin Electricity Consumption Index, China continues to host 21% of the total Bitcoin hash rate globally, trailing only the United States, which produces 38%.
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