China’s Biggest Mining Rig Maker Canaan Requests Authorities to Reconsider Crypto Mining Ban
After the recent crackdown and ban on crypto mining activities, Chinese crypto businesses have been facing tough time dealing with the regulatory policies. Canaan, china’s Biggest manufacturer of crypto mining rigs have asked authorities to reconsider crypto mining operations that make use of clean energy.
During the recent earnings call, Canaan CEO Zhang Nangeng argued that crypto mining businesses provider huge employment in the country while contributing to the local economy. Zhang added that crypto mining players who use clean energy from mining operations should be spared from the crackdown.
Two weeks back, the China State Council announced a complete ban on crypto mining citing some energy consumption issues. Crypto mining activities require massive electric power. On the other hand, the availability of cheap electric power in China made it a wider’s paradise before the recent crackdown.
In his appeal, Zhang stated: "For-profit miners prefer regions with low electricity prices that indicate oversupply, and likely energy waste. Bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers.”
Zhang’s comments came as most of the Chinese miners are considering their relocation to the overseas market. Big crypto mining players in China have started considering moving their operations to overseas markets like Europe and North America.
Canaan is itself facing severe heat of this crackdown. The erosion of the domestic mining industry in China has caused some of Canaan’s clients to hold off from placing new orders for mining rigs.
Besides, the Canaan executive notes that Beijing’s crackdown has also prompted some miners to “undersell” their mining equipment thereby knocking down the prices of mining rigs. In comparison to last month, the spot prices of the Bitcoin mining machines are down by 20-30% hurt by the falling Bitcoin prices.
To alleviate this business uncertainty, even Canaan has started to accelerate its overseas expansion. The company is considering setting up its own offshore Bitcoin mining business while securing some long-term contracts.
Canaan has already set up an office in Singapore and preparing further to launch its crypto mining business in the central Asian country of Kazakhstan. Recently, for its Q1 2021 results, Canaan reported a 500% surge clocking $63.1 million in its first-quarter sales. Canaan’s overseas business continues a massive 78% of its total revenues. To give a perspective, this was just 5% in Q1 2021.
"Just as it took a long time for bitcoin to be recognized by the market, there will also be a (long) process for bitcoin, and cryptomining, to be recognized by regulators" in China, Zhang said.