Chinese Mining Giant Canaan Doubles Its Profits Despite Blanket Crypto Ban

Leading Chinese cryptocurrency miner maker Canaan doesn’t seem to have a problem with the local crypto ban as the company’s overall performance continued to grow in 2022.

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

The company’s second-quarter net profit was RMB608 million, or $91 million, an increase of 149% from RMB425 million in the same period last year. Canaan noted that the foreign currency translation adjustment in the second quarter was a gain from previous losses due to the appreciation of the US dollar against the RMB in the second quarter.

Despite strong earnings, Canaan found the second quarter a tough time due to Bitcoin (BTC) falling below $20,000 in June, company CEO Nangeng Zhang said.

“The COVID-19-related lockdown in key cities across China has also caused severe disruptions to our daily operations and demand for our AI chips,” he noted.

Zhang mentioned that Canaan has expanded its global presence, especially by establishing an international headquarters in Singapore. The company also strived to expand 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 exerted by the price of Bitcoin since the last fourth quarter and expect it to bring prolonged headwinds to our performance over the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its long-term prospects.

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

“While the price of Bitcoin declined further in the second quarter, we reactively lowered the price of our products for spot sales to bear the pressure with our customers. […] We expect the gross margin to decline significantly in the second half of this year. »

The current cryptocurrency winter is not the only concern for crypto mining companies in China, however. 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 destroying several crypto mining farms in an effort to save energy and curb crypto operations in the country.

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

Apparently, the “Great Chinese Crypto Ban” hasn’t affected local crypto enthusiasts and businesses too much so far, with China once again becoming 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, after only the United States, which produces 38%.