Canaan – a large manufacturer and distributor of bitcoin and crypto mining equipment – has seen its profits and revenue plunge over the course of the last several months. Thus far, net income for the company has dipped roughly 88 percent in 2022, and the company has only made a little more than $8.5 million for the year.
Canaan Isn’t Doing So Hot
The mining sector has been suffering heavily as of late, partly because prices are going down, but also because electricity and energy costs continue to skyrocket thanks to ongoing inflation. The price of bitcoin, for example, is down more than 70 percent from its all-time high of about $68,000 per unit in November of 2021. Right now, it’s trading in the mid-$16,000 range.
Several other digital assets have followed suit, and as a result, the space has lost more than $2 trillion in overall valuation. This has arguably been one of the most bearish – if not the most bearish – years for crypto, and at the time of writing, very little is being witnessed in terms of hope and strength.
Canaan CEO Nangeng Zhang commented in a recent statement:
The negative market dynamics have significantly hindered bitcoin miners’ revenues and cash flows. As miners are forced to cut their demand for computing power, we had to adjust down our selling price in response.
2022 has been the year in which many crypto companies fall apart completely, and the mining sector has been particularly vulnerable. Not long ago, major digital currency mining farm Compute North was forced into bankruptcy proceedings, and other crypto-based companies – from Three Arrows Capital to Voyager Digital – have done the same.
But aside from all this, the digital mining space is facing heightened pressure to go completely green, something that isn’t entirely doable right now. Many eco-friendly people have gone against crypto mining, claiming that it is setting the planet on a downward spiral that could result in some major issues if things are not turned around quickly.
There have been many reports produced over the years that say bitcoin and crypto mining use more electricity than many of the globe’s developing nations. While this could ultimately be shrugged off, it doesn’t help when top figureheads like Elon Musk of SpaceX and Tesla fame are backing this sentiment.
In early 2021, Musk announced that Tesla buyers could purchase new vehicles with bitcoin. This decision didn’t last when he quickly decided that bitcoin miners couldn’t be trusted, and thus he wasn’t willing to support the space.
Trying to Keep Money in the Bank
Zhang further commented with:
Our priority is to conserve our cash, minimize our expenses, and endure this market downturn.
At press time, stock shares in Canaan are selling for less than $3 each according to data from Benzinga.
