Canaan’s Q4 22 Mining Revenue Increased by 368% But There’s a Catch

Increasing electricity costs and a decline in digital asset prices coupled with high mining difficulty in the fourth quarter slashed mining profit margins and made it difficult for miners to stay afloat.

Chinese crypto mining rig maker – Canaan – reported a mining revenue of $10.5 million in the fourth quarter, representing an increase of 16.3% from the previous quarter. It was also up by a staggering 368.2% compared to the same period in 2021.

But the bigger picture tells a different story.

Canaan’s Financial Results

According to the official press release, Canaan was not spared in the crypto winter either, as its year-on-year revenue took a severe hit. The company reported a staggering loss of 82% to $56.8 million. During the same period, it sold a total computing power of 15.1 million Thash/s, representing a YOY decrease of 32.4% from 22.3 million Thash/s in 2021.

In the fourth quarter, the total computing power sold was 1.9 million Thash/s, down by 45.8% from 3.5 million Thash/s in the previous. The figure was also down by 75.8% from 7.7 million Thash/s in the same period of 2021. The gross loss in the fourth quarter of 2022 stood at $33.5 million. During the same period, operating costs went up by 43.1% from the third quarter.

2022 was painful for Bitcoin miners around the world. Nangeng Zhang, Canaan’s Chairman and Chief Executive Officer, also attributed the sinking bitcoin price that led to lackluster market demand for mining machines resulting in the underwhelming performance of the company.

“Despite the challenging market environment, 2022 was a notable year of milestones for our company. We expanded globally and established overseas supply chains and headquarters in Singapore. Our teams gained experience in operating our mining business in various overseas locations.”

The exec is, however, optimistic about the financial results this year.

Change in Tide?

Losses aside, Zhang revealed that the company’s efforts yielded more progress in early 2023, with a 3.8 EH/s hash rate installed for mining as of the end of February. The exec said Canaan has made “decisive” investments focusing on its production capacity and expanding its mining operations to more diverse geographic regions that offer favorable conditions.

He went on to add that the growth of these high-quality assets is expected to bring the miner “tremendous bitcoin rewards and substantially appreciate in value when the bitcoin price increases.”