Ladies and gentlemen, thank you for standing by and welcome to Canaan Inc.'s Third Quarter 2022 Earnings Conference Call. [Operator Instructions] After the management's prepared remarks, we'll have a question-and-answer session. Please note that this event is being recorded. Now I'd like to hand the conference over to your speaker host today, Mr. Clark Soucy, Investor Relations Director of the company. Please go ahead, Clark.

Thank you, Mel. Hello, everyone, and welcome to our earnings conference call. The company's financial and operating results were released by our Newswire services earlier today and are currently available online. Joining us today are our Chairman and CEO, Mr. Nangeng Zhang; and our CFO, Mr. Jin Cheng James. In addition, Mr. Xiaoming Lu, our SVP; Mr. Leo Wang, IR Senior Director; and Ms. Xi Zhang, IR Manager, will also be available during the question-and-answer session. Mr. Zhang will start the call by providing an overview of the company and performance highlights for the quarter. Mr. Cheng will then provide details on the company's operating and financial results for the period before we open up the call for your questions. Before we continue, I would like to refer you to our Safe Harbor statement in our earnings press release. Today's call will include forward-looking statements. These statements include, but are not limited to, our outlook for the company and statements that estimate or project future results of operations or the performance of the company. These statements speak only as of the date thereof, and the company assumes no obligation to revise any forward-looking statements that may be made in today's press release, call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 20-F for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call and webcast, we'll discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of the company's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release, which is posted on the company's website. With that, I will now turn the call over to our Chairman and CEO, Mr. Nangeng Zhang. Please go ahead.

Hello, everyone. This is Nangeng, CEO of the company. Our CFO James and I are delighted to share our quarterly results in English from New York. Since the beginning of third quarter of this year, cryptocurrency and blockchain industry has been experiencing a great deal of turbulence, especially during the past weeks, there is a lot going on in the industry. And now that we are together on this conference call, we want to take this opportunity to speak openly with our investors and stakeholders. Market conditions have become more severe since the beginning of the third quarter of 2022. The Bitcoin price continue to decrease impacted by Federal Reserve’s interest rate increases and market expectations of further hikes. Meanwhile, Bitcoin’s total network hash rate remained at the high level and the miners’ incomes decreased. We are fully aware of the great difficulties in the mining industry. The current situation resembles similar difficult cycles we have previously navigated through. However, the situation is different today as we are facing more challenges, such as globally surging energy prices, miner’s credit risks, and the high financing costs caused by excessive leverage and high operating expenses for new miners. These factors have led to serious issues in miner’s operations. Furthermore, what has been happening in the industry has eroding industry [business] confidence. Turbulence in the industry is inevitable in the short term. On top of these headwinds, mining machine inventories in some regions remain high. All of these factors will negatively impact customer demand for and the pricing of our mining machines in the near term. What I want to emphasize is that although currently, participants in the industry are enduring a particularly difficult time, we remain confident of navigating through the bitcoin cycle. What we are going through now will turn into…

Thank you, Mr. Zhang. And good day everyone, this is James and with our CEO in New York City. As we discussed in August on our second quarter earnings call, in the third quarter of 2022, as we expected, the overarching industry environment started to negatively impact our demand and average selling price. We reported a total revenue of RMB978 million in the quarter, meeting our guidance range despite the year-over-year and sequential decrease. Specifically as the Bitcoin price further decreased to $16,000 recently, we expect the overall demand for mining machine remain constrained. In the third quarter, we delivered the total computing power sold of 3.5 million terahash per second. In response to the softening market, we lowered our selling price too, leading to a certain decline in the average selling price for the quarter. As a result of the combined effect, sales of our Bitcoin mining machines decreased to RMB 940 million for the quarter. In a challenging market downside cycle, we take the mining business as a hedge against the weakening mining machine sales. It has helped us better utilize our machine inventory and bringing additional revenue. Specifically, our mining business generated a mining revenue of RMB62 million, representing a quarter-over-quarter increase of 19%. In the third quarter, we started mining in the United States by deploying a trial batch of mining machines. Our increase in the Bitcoin production is also due to further improved electricity supply in our mining operations in Kazakhstan. Collectively, we have 3.2 exahash per seconds of total computing power deployed for our mining business as of the end of the third quarter. After paying certain direct costs, especially electricity bills with Bitcoins mined we held 535.5 Bitcoin, as of the quarter’s end representing 188.7 additional Bitcoin compared with 346.8 Bitcoin balance as…

Thank you. We will now begin the question-and-answer session. [Operator Instruction] Your first question comes from the line of Shuang Sun from Guosheng Securities. Please go ahead, your line is open.

[Foreign Language] [Interpreted] So you have established headquarters in Singapore, have you ever thought about being a completely foreign company?

[Foreign Language] [Interpreted] So considering the recent decline of Bitcoin price, we will have inventory write down, when will it occur?

Okay, thank you, James. [Foreign Language] [Interpreted] How is your total sales and future contract sales ratio?

Okay. [Foreign Language] [Interpreted] What’s the progress of collaboration with foundries?

[Foreign Language].

Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Kevin Dede from H.C. Wainwright. Please go ahead, your line is open.

Thank you. We'll now move on to our next question. Please stand by. Next question comes from the line of Jiaer Zhu from China Renaissance Securities. Please go ahead. Your line is open.

Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Hans Chung from D.A. Davidson. Please go ahead.

Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Michael Legg from the Benchmark Company. Please go ahead. Your line is open.

Thank you. As there are no further questions now, I'd like to turn the call back over to the company for any closing remarks.

Thank you. Hello, everyone, this is Clark. Once again, thank you very much for joining us today for the call. If you have any further questions, please feel free to reach out to us through the contact information provided on our IR website. Thanks again.

Thank you. That concludes the call today. Thank you everyone for attending. You may now disconnect.