Bitmain, once seen as the jewel in the crown for Bitcoin mining, has been having a tough time of late. Their proposed IPO was supposed to be a watershed moment for mining companies, but it fell flat. Then, former executive director Micree Zhan, who was ousted in a power struggle late last year. Now, reports are coming in that the company is cutting half of its staff ahead of the Bitcoin mining reward halving.
The layoffs come at a critical time for Bitcoin miners, and especially Chinese based ones. In May 2020, Bitcoin rewards will be cut in half, meaning that mining becomes half as rewarding, but supply drops which many feel will lead to renewed price action. More so, an important holiday in China, Chinese New Year is around the corner and it is famed for high spending.
The news of the layoffs came with evidence of disgruntled employees from Bitmain who have been protesting the move, according to an Industry insider and Primitive Crypto founding partner Dovey Wan who posted a tweet showing a banner being held up by employees.
The banner reads: “Protesting against Bitmain’s illegal layoffs” although, in China, this process of staff cutting is emphasised as employee structure optimization.
Troubles at Bitmain
In March last year, Bitmain, having tried to drum up interest for its outlandish IPO which it hoped to raise $18 billion in to achieve a market capitalization of around $40 billion. If it would have gone through, that would have made Bitmain’s IPO the largest in history.
This failed as its application timeout and the idea faded away, but the damage was done as a lot of reputation was lost, and restructuring at the highest level caused confusion. More so, the power struggle between recognisable CEO Jihan Wu and Zhan lead to bad blood and more negative press.
The layoffs have been called suicidal by Zhan, adding that he disagreed strongly with the current layoffs in Bitmain and outlined that most of the layoffs were coming from R&D.
Concern for the mining sector?
Bitmain made a name for itself as the leader in the mining sector with its popular miners and ASIC chips which accelerated the mining efforts of many coins. However, they have lost their drip on the top not only with the internal struggles but also as competition has caught up with them.