Rising electricity costs and a fall in digital asset prices, coupled with high mining problems in the fourth quarter, have reduced mining profit margins and made it difficult for miners to stay afloat.
Chinese maker of crypto mining rigs – Canaan – reported mining revenue of $10.5 million in Q4, up 16.3% from the previous quarter. It also increased by a whopping 368.2% compared to the same period in 2021.
But the bigger picture tells a different story.
Canaan’s financial results
Canaan was also not spared in the crypto winter, according to the official press release, as year-over-year sales took a heavy hit. The company reported a staggering 82% loss to $56.8 million. During the same period, it sold a total of 15.1 million Tash/s, representing a year-over-year decline of 32.4% from 22.3 million Tash/s in 2021.
In the fourth quarter, total computing power sold was 1.9 million Tash/s, 45.8% lower than the 3.5 million Tash/s in the previous quarter. The figure also declined 75.8% from 7.7 million Tash/s in the same period of 2021. The gross loss in the fourth quarter of 2022 was $33.5 million. In the same period, operating expenses increased by 43.1% compared to the third quarter.
2022 has been painful for Bitcoin miners around the world. Nangeng Zhang, Canaan’s Chairman and Chief Executive Officer, also credited the declining bitcoin price leading to weak market demand for mining equipment, resulting in the company’s disappointing performance.
“Despite the challenging market environment, 2022 has been a remarkable year with milestones for our business. We expanded globally and established overseas supply chains and headquarters in Singapore. Our teams have gained experience in running our mining operations in various overseas locations.”
However, the exec is optimistic about the financial results this year.
Change in tide?
Losses aside, Zhang revealed that the company’s efforts saw more progress in early 2023, with an installed hash rate of 3.8 EH/s for mining as of late February. The exec said Canaan has made “decisive” investments, focusing on its production capacity and expanding its mining operations into more diverse geographic regions that offer favorable conditions.
He added that the growth of these high-value assets is expected to bring the miner “huge bitcoin rewards and significantly increase in value when the bitcoin price rises.”
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