A major Chinese maker of bitcoin mining machines yesterday argued against an indiscriminate crackdown on cryptocurrency mining in China, saying that the business helps make better use of electricity, and contributes to employment and the local economy.
Canaan Inc (嘉楠耘智) chief executive officer Zhang Nangeng (張楠賡) told an earnings conference call that although fossil-fuel powered cryptomining activities hamper Beijing’s greenhouse gas reduction efforts, those powered by clean energy should be spared from the crackdown.
“For-profit miners prefer regions with low electricity prices that indicate oversupply, and likely energy waste,” Zhang said. “Bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers.”
Photo: AFP
Zhang’s comments came after the Chinese State Council last month ordered a crackdown on energy-intensive bitcoin mining and trading, and Inner Mongolia, a major mining center, proposed measures to root out the practice.
Energy regulators in southwest Sichuan — a province rich in hydropower — yesterday met local power generators to probe cryptomining in China’s second-biggest bitcoin production hub.
Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers competing to solve complex mathematical puzzles in an energy-intensive process that often relies on fossil fuels, particularly coal.
NASDAQ-listed Canaan makes machines, or rigs, to mine bitcoins.
Zhang said that policy uncertainty is prodding domestic miners to move overseas, and causing some clients to hold off placing new orders for mining equipment.
Beijing’s crackdown is also prompting some miners to “undersell” mining equipment, helping knock down prices, Zhang said.
Spot prices of bitcoin mining machines are down 20 to 30 percent from about a month ago, hurt by falling bitcoin prices.
To reduce business uncertainty, Canaan is accelerating overseas expansion, securing long-term contracts and setting up its own offshore bitcoin mining business, Zhang said.
Canaan, which on Tuesday reported a nearly 500 percent surge in first-quarter sales to 402.8 million yuan (US$63.1 million), said that overseas markets now contribute to 78.4 percent of its total revenue.
That compares with just 4.9 percent in the first quarter of last year.
Orders from overseas clients, including Canada’s Hive Blockchain Technologies Ltd and Core Scientific Inc, accounted for more than 70 percent of total orders, it said.
Canaan is also expanding into bitcoin mining itself, having set up an office in Singapore, and is preparing to launch a cryptomining business in 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 [Chinese] regulators,” Zhang said.
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