Chinese mining giant Canaan doubles profits despite blanket crypto ban

Major Chinese cryptocurrency miner Canaan doesn’t seem to have any issues with the local crypto ban, as the company’s overall performance has continued to grow in 2022.

Canaan officially announced financial results for the second quarter of 2022 on Thursday, reporting a 117% increase in gross profit from the same period in 2021. According to the firm, Q2 profit was 930 million renminbi (RMB), or nearly $139 million.

The company’s net income for the second quarter was RMB 608 million, or $91 million, or an increase of 149% from RMB 425 million in the same period last year. Canaan noted that the Q2 currency translation adjustment was an income compared to prior losses due to the appreciation of the US dollar against the RMB during Q2.

Despite significant profits, Canaan has found the second quarter a challenging period due to Bitcoin (BTC) plunging below $20,000 in June, company CEO Nangeng Zhang said.

“The Covid-19 lockdown in key cities in China also led to serious disruptions to our daily operations and the demand for our AI chips,” he noted.

Zhang mentioned that Canaan has expanded its global presence, notably establishing international headquarters in Singapore. The firm has also been working on scaling its mining operations, generating more BTC with an improved power supply. As of the end of 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 on the Bitcoin price since the last fourth quarter and expect it to provide prolonged headwinds to our performance in 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, stating that the company expects a tougher market environment from the lower Bitcoin price level as well as increased energy prices and various pandemic and geopolitical uncertainties. He stated:

“As the Bitcoin price declined further in the second quarter, we responsively lowered our spot sales product price to bear the pressure with our customers. […] We expect the gross margin to decrease dramatically in the second half of this year.”

However, the ongoing cryptocurrency 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, pushing many firms to force global expansion and flee to other countries. Prior to the ban, China shut down several crypto mining farms in a move to save energy and limit crypto operations in the country.

Related: Bitcoin Mining Revenue Jumps 68.6% From Lowest Earnings Day in 2022

Apparently, the “Great Chinese Crypto Ban” has not affected local crypto enthusiasts and firms too much so far as China has re-emerged as the second largest Bitcoin mining country by January 2022. According to data from the Cambridge Bitcoin Electricity Consumption Index, China is still the host. 21% of the total global Bitcoin hash rate, second only to the US, which produces 38%.