By Dean Seal


Canaan is dealing with regulatory changes in Kazakhstan and a dispute over its mining operations in the U.S. that may hurt its ability to generate bitcoin and revenue.

The Singapore-based computing solutions provider said Friday that it shut down some of its mining computing power in Kazakhstan in July 2023 after new rules for licensing digital mining activities became effective there. Canaan said it is working to obtain a license for mining there but has to wait on a local partner to obtain a license first.

Operations in Kazakhstan are expected to remain suspended into the third quarter, which will reduce bitcoin generation. The amount of computer power that has been shut down makes up about half of Canaan's total installed computing power in Central Asia and North America.

Separately, Canaan's U.S. business was recently in mediation over an alleged breach of contract with a partner that provides hosting and management services for cryptocurrency mining machines.

The mediation was mandatory for Canaan U.S. to proceed to arbitration, where it now seeks to recover for the partner's alleged failure to install 13,000 cryptocurrency mining machines, refund a $1.25 million deposit, maintain operations for 13,000 other machines that were installed and haven't been returned and pay Canaan U.S. a substantial amount of Bitcoin profits.

Canaan also claims that the partner tried to impose substantial off-contract operating fees and failed to find a satisfactory mining pool provider for Canaan U.S.

Challenges from that dispute are also expected to affect Canaan's mining computing power in the third quarter.

"We recognize that operating in a dynamic market environment comes with its share of uncertainties," the company said.

Shares fell 13% to $2.04 in premarket trading.


Write to Dean Seal at dean.seal@wsj.com


(END) Dow Jones Newswires

08-18-23 0941ET