This decision follows the recent implementation of the Rules for Licensing of Digital Mining Activities by the Ministry of Digital Development, Innovations, and Aerospace Industry of the Republic of Kazakhstan.
These regulations stem from Law No. 193-VII on Digital Assets, enacted in April, and provide a framework for cryptocurrency mining within the country.
As a result of these changes, Canaan’s local partner has initiated the process of obtaining a specialized license, a prerequisite for engaging in cryptocurrency mining as per the new regulations.
This step towards legal compliance addressed the potential challenges highlighted by Canaan itself. The company expressed concerns about decreased uptime and its potential negative impact on bitcoin generation and mining revenue starting in Q3 2023.
While this adjustment aims to ensure conformity with evolving regulatory landscapes, Canaan continues to grapple with additional challenges. The firm is navigating a dispute in the United States regarding its mining operations. This further compounds its efforts to maintain efficient Bitcoin generation and overall profitability.
The temporary suspension of operations in Kazakhstan accounts for about half of Canaan’s total installed computing power in Central Asia and North America, leading to a predicted reduction in Bitcoin production.
Additionally, the company’s US business has engaged in mediation due to alleged contract breaches by a partner responsible for cryptocurrency mining machine hosting and management services.
Amidst these complexities, Canaan’s exposure to the Bitcoin mining machine market’s future remains a pivotal concern. This market’s viability could impact the company’s operations and financial performance significantly.
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