Historic Bitcoin mining revenue fails to offset Canaan Q2 financial loss

Aug 31, 2023

Bitcoin (BTC) miner Canaan‘s second-quarter financial report showed that the firm operated at a loss during the reporting period despite its increasing mining revenue and computing power.

Per the unaudited financial report, the miner generated a total revenue of $73.9 million, while its “cost of revenues” were $143.9 million, resulting in a gross loss of $70.1 million. The firm had recorded a gross loss of $47.5 million during the first quarter.

James Jin Cheng, the chief financial officer of Canaan, added that the firm recorded a net loss of $110.7 million, including inventory write-down, provision for commitment reserve, and impairment of property and equipment, totaling $54.7 million.

Canaan revealed that its mining revenue for the second quarter grew to a historic high of $15.9 million, representing a 43.3% increase from what it generated during the first quarter of the year.

Per the statement, the mining revenue achievement is noteworthy, considering the persistent rise in mining difficulty and hash rates and the regulatory challenges some of its mining facilities encountered.

CEO Nangeng Zhang stated that the firm surpassed its topline guidance despite the relatively stagnant price of the flagship digital asset.

Besides that, the miner revealed that the total computing power it sold during the quarter jumped by more than 44% to 6.1 million Thash/s.

Zhang said the firm’s endeavor to drive sales across various fronts, including major clients, channels, and retail, yielded encouraging results. He further highlighted how the company’s partnerships with channel clients proved fruitful while its online retail store continued to capture new clientele from diverse geographical regions.

Meanwhile, CFO Cheng attributed the “better-than-expected” revenue performances to improvements in its sales and mining activities.

The miner, however, conceded that the regulatory environment and the unpredictability of the crypto market could pose challenges for its continued success.

Cheng said:

“The severe emerging challenges that may impede our business operations. These challenges encompass regulatory shifts across countries, counterparty risks within this evolving market, and the broader economic landscape’s unpredictability as well as unforeseen events that may pressure the bitcoin price.”

The CEO also shared similar sentiments, particularly noting that the firm encountered adverse impacts from regional regulatory changes and how an unnamed partner breached an agreement relating to its mining operations.

Canaan suspended around 2.0 Exahash/s of its mining computing capacity after encountering regulatory issues in Kazakhstan. The firm is also involved in a legal tussle in the United States over a breached “Joint Mining Agreement.”

Oluwapelumi values Bitcoin's potential. He imparts insights on a range of topics like DeFi, hacks, mining and culture, underlining transformative power.

Also known as "Akiba," Liam is a reporter, editor and podcast producer at CryptoSlate. He believes that decentralized technology has the potential to make widespread positive change.

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