Canaan Creative has some monster-sized decisions to make if it wants to stay in business and compete with the likes of Bitmain and other mega mining ventures.
Canaan Creative Isn’t Where It Needs to Be
Canaan Creative is arguably the second-largest crypto mining firm in China after Bitmain, and yet the company isn’t doing so hot since the halving. Stock shares in the company have fallen well below the two-dollar mark, suggesting that people just aren’t interested in the company’s equipment – or in extracting new bitcoin blocks – anymore.
And when you really think about it, why should they be? The bitcoin halving that occurred on May 12 was the third event of its kind for the world’s largest digital currency by market cap. The first halving took place in 2012, while the second occurred in 2016. This third event saw the mining rewards for bitcoin miners fall from roughly 12.5 BTC – where they had been for about four years – to roughly 6.25 BTC.
The mining rewards for extracting new blocks have fallen to their lowest positions, meaning that there isn’t much for miners to enjoy when introducing new bitcoin units to the world and expanding the trading space. While it’s hard to label bitcoin mining as a dead business, it’s easy to say that the space has undoubtedly suffered since the highly anticipated event – an event that saw more during its leadup than while it was actually occurring.
Aries Wang – co-founder of crypto exchange Bibox – says that Canaan Creative is experiencing not necessarily unpopularity, but a downgrade in the demand for its machinery. Similar with what the company experienced in 2018 due to bitcoin’s lagging price, the costs associated with mining and extracting new bitcoin blocks are simply too high for the rewards at hand, which is causing many smaller ventures to close up shop and move on.
He states:
Some of the earliest Chinese miners started to raise funding from institutional investors and buy new models and phase out old machines so that they would be prepared for the halving. Many had already completed the update on infrastructure such as mining sites and miners before the end of February.
Stocks Are Falling Like Crazy
Canaan Creative is a Nasdaq-listed venture that saw its stock shares fall as low as $1.98 during yesterday’s late trading hours. This means that shares have dropped by just under four percent at the time of writing – one of the company’s lowest points.
In addition, the company has already experienced financial hardship this year after during the first quarter of 2020, executives decided to cut machine prices in half, resulting in a net loss of more than $5 million for the company during the first three months. Other mining companies, such as Riot Blockchain, are suffering as well, while companies like Digital Farms in California have closed indefinitely.
