Chinese mining giant Canaan doubles profits despite the blanket crypto ban

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Major Chinese cryptocurrency miner manufacturer Canaan seems to have no problems with the local crypto ban, as the company’s overall performance 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 company, the Q2 profits amounted to 930 million renminbi (RMB), or nearly $139 million.

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

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

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

Zhang mentioned that Canaan has expanded its global presence, notably by establishing an international headquarters in Singapore. The company has also been working to scale its mining business, generating more BTC with 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 on the Bitcoin price since the last quarter and expect it to bring prolonged 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, 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 price of Bitcoin continued to decline in the second quarter, we accordingly lowered our product price for on-site sales to bear the pressure with our customers. […] We expect the gross margin to decline dramatically in the second half of this year.”

The ongoing cryptocurrency winter is not the only concern of 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, pushing many firms to force global expansion and flee to other countries. Before the ban, China demolished several crypto mining farms to save energy and curb crypto operations in the country.

Related: Bitcoin mining revenue rises 68.6% from the lowest revenue day of 2022

Apparently, the “great Chinese crypto ban” has not affected local crypto enthusiasts and companies 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 still hosts 21% of all global Bitcoin hashrate, trailing only the United States, which produces 38%.