China’s biggest mining rig manufacturer Canaan has appealed to Chinese authorities to reconsider its indiscriminate ban on crypto mining activities in the country. Last month, China’s State Council announced a ban on Bitcoin and crypto mining operations leading to a major downfall in the crypto market.
China has been one of the biggest destinations controlling 60% of the global crypto mining. Since crypto mining requires consumes massive electric power authorities have been cracking down on them. However, Canaan argues that businesses that use clean energy for crypto mining should be spared.
The Nasdaq-listed crypto mining equipment manufacturer argued that mining employees a large number of people contributing to China’s local economy. Canaan Inc CEO Zhang Nangeng expressed his views during the recent earnings call.
“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,” he told Reuters.
Amid the China crackdown, miners from Inner Mongolia and Sichuan started selling their mining machines. As a result, crypto miners situated in this region have started facing the heat of the regulatory wrath.
Canaan’s Business Also Faces the Heat
Canaan CEO Zhang said that China’s policy uncertainty is causing major mining players to move to overseas locations like North America and Europe. As a result, some of Canaan’s clients have placed new orders for mining equipment on hold.
Besides, Zhang adds that owing to the crackdown, many miners have rushed to underselling their rigs thereby creating a knockdown effect on the pricing. To reduce this impact of the Chinese crackdown, Canaan is also accelerating its overseas expansion. The mining rig manufacturer is setting up its own offshore mining entity while securing long-term contracts.
Canaan recently reported $63 million in sales of its Bitcoin mining machines during Q1 2021, reporting a massive 500% surge in its business. The overseas market contributes ~80% of the company’s revenues. Canaan has also established its office in other Asian locations like Singapore and Kazakhstan.
“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.