Rising electricity costs and falling digital asset prices, combined with high mining difficulty in the fourth quarter, slashed mining margins and made it difficult for miners to stay afloat.
Chinese crypto mining machine manufacturer Canaan reported mining revenue of $10.5 million in the fourth quarter, a 16.3% increase from the previous quarter. This is also a staggering 368.2% increase compared to the same period in 2021. But the bigger picture tells a different story. According to an official press release, Canaan was not spared from the crypto winter either, with its year-over-year revenue taking a severe hit. The company reported losses as high as 82%, to $56.8 million. During the same period, it sold a total of 15.1 million Thash/s of computing power, a year-on-year decrease of 32.4% from 22.3 million Thash/s in 2021.
The total amount of computing power sold in the fourth quarter was 1.9 million Thash/s, a decrease of 45.8% from 3.5 million Thash/s in the previous quarter. The figure is also down 75.8% from 7.7 million Thash/s in the same period in 2021. Gross loss for the fourth quarter of 2022 was $33.5 million. During the same period, operating costs rose 43.1% from the third quarter. 2022 is painful for bitcoin miners around the world. Zhang Nangeng, chairman and CEO of Canaan Zhizhi, also blamed the company's poor performance on this due to the low demand for mining machines caused by the decline in the price of Bitcoin.
Losses aside, Zhang revealed that the company’s efforts have seen more progress in early 2023, installing a 3.8 EH/s hash rate for mining as of the end of February. Canaan has made "decisive" investments to focus on its production capacity and expand its mining operations into more diverse geographic areas that offer favorable conditions, the executive said.
He went on to add that the growth of these high-quality assets is expected to bring "huge bitcoin rewards to miners and massive appreciation when the price of bitcoin rises."
