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Crypto miners help create jobs, contribute to fiscal coffers and like to be in areas with energy oversupply, CEO says.
Published On 2 Jun 2021
A serious Chinese maker of Bitcoin mining machines argued against an indiscriminate crackdown on cryptocurrency mining in China, saying the business helps make higher use of electricity and contributes to employment and the local economy.
Zhang Nangeng, CEO of Nasdaq-listed Canaan Inc, told an earnings conference call that although crypto mining activities using fossil-fuel power hampers Beijing’s green efforts, those powered by clean energy ought to be spared from the crackdown.
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“For-profit miners prefer regions with low electricity prices that indicate oversupply, and certain energy waste,” Zhang said. In addition, “Bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers”.
Zhang’s comments come after China’s State Council, last month, ordered a crackdown on energy intensive Bitcoin mining and trading, and Inner Mongolia, a serious mining centre, proposed measures to root out the practice.
Energy regulators in southwest Sichuan – a province wealthy in hydropower – met local power generators on Wednesday to probe crypto mining in China’s second-biggest Bitcoin production hub.
Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers competing to unravel complex mathematical puzzles in an energy-intensive process that usually relies on fossil fuels, particularly coal.
Canaan makes machines, or rigs, to mine bitcoins.
Overseas expansion
Zhang said policy uncertainty is prodding domestic miners to maneuver overseas, and causing some clients to carry off on placing latest orders for mining equipment.
Beijing’s crackdown can be prompting some miners to “undersell” mining equipment, helping knock down prices, Zhang said.
Spot prices of Bitcoin mining machines are down 20-30 percent from roughly a month ago, hurt by falling Bitcoin prices.
To reduce business uncertainty, Canaan is accelerating overseas expansion, securing long-term contracts, and organising its own offshore Bitcoin mining business.
Canaan, which on Tuesday reported an almost 500 percent surge in first-quarter sales to 402.8 million yuan ($63.12m), said overseas markets now contribute to 78.4 percent of its total revenues. That compares with just 4.9 percent in the primary quarter of 2020.
Orders from overseas clients, including Canada’s Hive Blockchain Technologies, and US crypto player Core Scientific, also account for greater than 70 percent of total orders.
Canaan can be expanding into Bitcoin mining itself, having arrange an office in Singapore, and is preparing to launch a cryptomining business in Kazakhstan, in central Asia.
“Just because it took an extended time for Bitcoin to be recognised by the market, there will even be a (long) process for Bitcoin, and crypto mining, to be recognised by regulators” in China, Zhang said.
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