Canaan, a significant Chinese manufacturer of cryptocurrency mining equipment, doesn’t seem to be bothered by the local prohibition on cryptocurrencies, as evidenced by the company’s continuous growth 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 of 2021. According to the firm, the Q2 profits amounted to 930 million renminbi (RMB), or nearly $139 million.
The company’s Q2 net income increased by 149% from the same period last year to 608 million RMB, or $91 million. Canaan stated that due to the U.S. dollar’s increase versus the RMB during Q2, foreign currency translation adjustment in Q2 was an income compared to prior losses.
According to Canaan’s CEO Nangeng Zhang, despite recording considerable earnings, the second quarter was difficult since Bitcoin (BTC) fell below $20,000 in June.
“The COVID-19 containment lockdown in key cities in China also brought severe disruptions to our daily operations and demand for our AI chips,” he noted.
Zhang stated that Canaan has been growing its reach internationally
Particularly by creating an international headquarters in Singapore. The company has also been seeking to expand its mining operations, which will produce more BTC with a better power supply. According to the CEO, Canaan held 346.84 BTC, or $8.1 million, as of the end of June.
“We are fully aware of the downward pressure from the Bitcoin price since the last fourth quarter and expect it to bring prolonged headwinds to our performance in the coming quarters. Nevertheless, we believe in the unique value of Bitcoin and its long-term prospects.”
In line with the CEO’s comments, Canaan’s chief financial officer James Jin Cheng said that the company anticipates a more challenging market environment due to the lower Bitcoin price level, higher energy prices, and numerous pandemic and geopolitical worries. He declared:
“As the Bitcoin price further decreased in the second quarter, we responsively lowered our product price for spot sales to shoulder the pressure with our clients. […] We expect the gross margin to decrease dramatically in the second half of this year.”
However, Chinese crypto mining companies are not only worried about the current cryptocurrency winter. As previously mentioned, in September 2021, China issued a total ban on all cryptocurrency operations, including mining and trading. This forced many businesses to drive worldwide expansion and flee to other nations. In an effort to conserve energy and limit cryptocurrency operations in the nation, China was destroying numerous crypto mining facilities prior to the ban.
By January 2022, China had once again overtaken the United States as the second-largest Bitcoin mining nation, therefore it appears that the “great Chinese crypto ban” has not had a significant impact on local crypto fans and businesses. China continues to produce 21% of the world’s Bitcoin hash rate, second only to the United States (38%), according to data from the Cambridge Bitcoin Electricity Consumption Index.
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