Chinese crypto mining equipment producer Canaan is arguing against the indiscriminate crackdown on cryptocurrency mining in China, citing the industry’s economic efficiency.
Cryptocurrency mining is an energy-intensive process, largely powered by fossil fuels in China, which are holding back Beijing’s green efforts. However, Canaan CEO Zhang Nangeng said in an earnings conference call that those powered by clean energy should be spared. He argues that crypto mining is actually highly economically efficient, using excess energy and providing jobs.
“For-profit miners prefer regions with low electricity prices that indicate oversupply, and likely energy waste,” Zhang said, adding that “bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers.”
Crypto mining crackdown
The comments come in light of China’s State Council decision to crack down on energy-intensive bitcoin mining and trading. Meanwhile, in the major mining center of Inner Mongolia, there are proposed measures to halt mining operations. Additionally, energy regulators in the hydropower-rich Sichuan region recently met local power generators to probe crypto mining.
In addition to not utilizing its economic efficiencies, the crackdown has had the additional negative effect of nudging business overseas. In addition to this caveat, the Canaan CEO added that clients were also holding off new orders for mining equipment. On the other hand, the crackdown has caused some miners to “undersell” their equipment, making it cheaper to acquire. According to Zhang, prices of bitcoin mining machines are down 20%-30% from roughly a month ago.
Canaan’s expansion abroad
In order to account for this regulatory uncertainty, Canaan has expedited its own expansion overseas. In its recent earnings report, Canaan detailed that 78.4% of its total revenues came from overseas markets. The company reported a near 500% surge in first-quarter sales to 402.8 million yuan ($63.12 million).
Foreign clients include Canada’s Hive Blockchain Technologies, and U.S.-based Core Scientific, which accounts for over 70% of its total orders. The hardware company is also expanding into bitcoin mining itself. It recently established an office in Singapore and is preparing to launch a crypto mining business in Kazakhstan.