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Mining rig maker Canaan argues against wholesale crackdown on bitcoin mining in China

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A major Chinese maker of bitcoin mining machines argued against an indiscriminate crackdown on cryptocurrency mining in China, saying the business helps make better use of electricity and contributes to employment and the local economy.

Zhang Nangeng, CEO of Nasdaq-listed Canaan Inc, told an earnings conference call that although cryptomining activities using fossil-fuel power hampers Beijing’s green efforts, those powered by clean energy should be spared from the crackdown.

“For-profit miners prefer regions with low electricity prices that indicate oversupply, and likely energy waste,” Zhang said.

In addition, “bitcoin miners also help create jobs in impoverished regions and contribute to fiscal coffers.”

Zhang’s comments come after China’s State Council, last month, ordered a crackdown on energy intensive bitcoin mining and trading, and Inner Mongolia, a major mining centre, proposed measures to root out the practice.

Energy regulators in southwest Sichuan – a province rich in hydropower – met local power generators on Wednesday to probe cryptomining in China’s second-biggest bitcoin production hub.

Bitcoin and other cryptocurrencies are created or “mined” by high-powered computers competing to solve complex mathematical puzzles in an energy-intensive process that often relies on fossil fuels, particularly coal.

Canaan makes machines, or rigs, to mine bitcoins.

Zhang said policy uncertainty is prodding domestic miners to move overseas, and causing some clients to hold off placing new orders for mining equipment.

Beijing’s crackdown is also prompting some miners to “undersell” mining equipment, helping knock-down prices, Zhang said.

Spot prices of bitcoin mining machines are down 20%-30% from roughly a month ago, hurt by falling bitcoin prices.

To reduce business uncertainty, Canaan is accelerating overseas expansion, securing long-term contracts, and setting up its own offshore bitcoin mining business.

Canaan, which on Tuesday reported a nearly 500% surge in first-quarter sales to 402.8 million yuan ($63.12 million), said overseas markets now contributes to 78.4% of its total revenues. That compares with just 4.9% in the first quarter of 2020.

Orders from overseas clients, including Canada‘s Hive Blockchain Technologies, and U.S. crypto player Core Scientific, also account for more than 70% of total orders.

Canaan is also expanding into bitcoin mining itself, having set up an office in Singapore, and is preparing to launch a cryptomining business in Kazakhstan, in central Asia.

“Just as it took a long time for bitcoin to be recognized by the market, there will also be a (long) process for bitcoin, and cryptomining, to be recognized by regulators” in China, Zhang said.

($1 = 6.3820 Chinese yuan renminbi)

 

(Reporting by Samuel Shen and Alun John; Editing by Shri Navaratnam)

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More China coal investments overseas cancelled than commissioned since 2017

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More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, research showed on Wednesday, highlighting the obstacles facing the industry as countries work to reduce carbon emissions.

The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period.

Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness.

Since 2016, the top 10 banks involved in global coal financing were all Chinese, and around 12% of all coal plants operating outside of China can be linked to Chinese banks, utilities, equipment manufacturers and construction firms, CREA said.

But although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, it added.

China is currently drawing up policies that it says will allow it to bring greenhouse gas emissions to a peak by 2030 and to become carbon-neutral by 2060.

But it was responsible for more than half the world’s coal-fired power generation last year, and it will not start to cut coal consumption until 2026, President Xi Jinping said in April.

Environmental groups have called on China to stop financing coal-fired power entirely and to use the funds to invest in cleaner forms of energy, and there are already signs that it is cutting back on coal investments both at home and abroad.

Following rule changes implemented by the central bank earlier this year, “clean coal” is no longer eligible for green financing.

Industrial and Commercial Bank of China, the world’s biggest bank by assets and a major source of global coal financing, is also drawing up a “road map” to pull out of the sector, its chief economist Zhou Yueqiu said at the end of May.

 

(Reporting by David Stanway; Editing by Kenneth Maxwell)

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Bank of Montreal CEO sees growth in U.S. share of earnings

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Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.

“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”

($1 = 1.2145 Canadian dollars)

 

(Reporting by Nichola Saminather; Editing by Leslie Adler)

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GameStop falls 27% on potential share sale

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Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.

The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.

“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”

Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.

Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.

Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.

AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.

“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”

Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.

GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.

GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.

The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.

In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.

 

(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)

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