China might have lost the title of the world’s biggest Bitcoin mining hub to the US after the crypto ban in 2021, but Chinese crypto miner Canaan appears to be undeterred by the ban, going by its quarterly results.
Canaan, a leading provider of high-performance computing solutions, released its second-quarter results on 18 August. The company registered a 117% increase in gross profit in the quarter, or about $139 million in USD terms. Net income came in at $91 million, a 149% increase from the same period a year ago.
The firm attributed the rise in profit to foreign currency translation, which worked to its advantage this time around compared to previous losses due to the US dollar’s appreciation against the RMB. While the profit in the second quarter of the year looks impressive, Canaan noted that it was not easy, especially with Bitcoin (BTC) falling below $20,000 amid the crypto winter.
Crypto ban no deterrent
To rewind a bit, China shocked the crypto world by banning all crypto operations, including mining and trading, in September 2021. The surprise move pushed many firms to shift their operations to other countries to pursue their expansion plans. However, the financial report from Canaan clearly indicates that the crypto ban in China has not affected the crypto industry in the country.
Why Canaan stayed profitable despite China’s crypto mining ban
China shook the crypto market by banning all crypto operations, including mining and trading, in September 2021. The move pushed many firms to shift operations to other countries and continue their expansion plans there.
Canaan’s financial report shows the ban in China did not fully derail Chinese-linked crypto businesses. Some adjusted by serving overseas markets, spreading out operations, and relying on global demand for mining infrastructure.
Canaan Q2 2022 financial highlights
| Metric | Q2 2022 Result | YoY Change |
| Gross profit | $139 million | +117% |
| Net income | $91 million | +149% |
| Key profit driver | Foreign currency translation gains | — |
| Market backdrop | Bitcoin below $20,000 | Weak crypto market |
FAQ
What did China ban in crypto?
China announced a sweeping ban on crypto-related activity in 2021, including crypto trading and mining. The move forced many miners and related firms to either shut down local operations or move business activity abroad.
How could Canaan still post a profit after the ban?
Canaan stayed profitable largely because it operated as a mining hardware and computing solutions provider with exposure beyond mainland China. Its quarterly results also benefited from foreign exchange translation gains.
Does this mean China’s crypto industry continued after the ban?
Not in the same way as before. The ban sharply disrupted domestic mining and trading, but some Chinese-founded or Chinese-linked crypto companies continued to generate revenue by serving international markets and moving parts of their business overseas.
