Chinese cryptocurrency mining machine manufacturer Canaan recorded remarkable growth in Q2 2021 despite a sweeping crypto crackdown in China and swings in the price of bitcoin, as market demand for the company’s hardware remains strong.
The Hangzhou-based firm saw its revenue reach a record high of RMB 1.08 billion (USD 167.5 million) in the second quarter ended June 30, according to its financial report released on Wednesday. As market demand for bitcoin mining machines grows, Canaan sold computing power amounting to 5.9 million TH/s—the strongest quarterly total sales in the company’s history.
Canaan achieved net profits to the tune of RMB 427.1 million (USD 66.2 million), realizing nearly 900% year-on-year growth atop RMB 43.3 million (USD 6.7 million) in 2020.
Canaan also recorded significant net income of RMB 245.0 million (USD 37.9 million), compared to RMB 1.2 million in Q1 when there was a price spike in bitcoin.
The company’s operating expenses went from RMB 62.2 million (USD 9.6 million) in Q2 2020 to RMB 261.6 ml (USD 40.5 million) in the latest quarter, marking a 320% increase as it recruited new R&D staff and increased its marketing budget.
“Despite unexpected regulatory policy dynamics and bitcoin price volatility, we achieved record-high top-line results,” said Zhang Nangeng, chairman and CEO of Canaan.
Over the summer, the Chinese government ordered all mining farms in the country to shut down. This led to a mass migration of miners to North America and Europe. With fewer miners online, bitcoin supplies dived, price volatility increased, and demand for new rigs skyrocketed. In this progression, mining machine makers reaped the benefits.
Judging from the total power consumed by electricity-hungry cryptocurrency mining machines, the frenzy continues. Bloomberg reported that the mining industry has already used more power so far this year than in all of 2020, and the rate of power consumption is expected to become even steeper. By the end of this year, the sector will have used 91 TWh of energy, nearly as much as the entire annual power consumption of Pakistan.
Canaan expects total revenues to increase by 10–30% for the next quarter. The company plans to deploy even more computing power to seize the tremendous opportunities of bitcoin mining, Zhang noted.