Bitmain had been the leader in the crypto mining tech manufacturing business for a long time. It has also been involved in various innovations related to the mining industry and is also the company behind the world’s largest cryptocurrency mining farm. With Bitcoin’s hash rate reaching new heights, Bitmain continues to play a key role in this sector.
Over the past few years, the company has been struggling with declining market dominance alongside various struggles within the upper management. Back in October, Bitmain CEO Jihan Wu ousted co-founder Micree Keutan Zhan, who was also the major shareholder with a 60% stake in Bitmain.
While Zhan claimed that he was “stabbed” in the back and he would return “as soon as possible through legal methods,” no proper revelation as to what actually happened has been made.
It was reported that Wu and three other founding members of Bitmain had tried to persuade Zhan to reach a unanimous decision about a round of major layoffs, which Wu and others viewed as necessary for saving the company. Zhan had resisted the plan.
After a period of turmoil, it looks like Wu is back in action leading Bitmain with a new strategy that’ll supposedly help reverse the decline in market share that the company has been experiencing over the past year.
Speaking at a customer event hosted by Bitmain, Wu proposed that Bitmain should take on the risks related to cash flow, Bitcoin (BTC) volatility and electricity costs to persuade miners to keep investing on mining equipment.
As a part of the new strategy, Bitmain is set to lower upfront deposits to help miners purchase mining equipment in bulk. As such if miners place an order for 100 – 999 mining equipment, they’ll only need to pay 50% of the total amount upfront. This can be reduced up to 20% if they order larger amounts of equipment. The rest of the amount can be cleared seven days prior to the shipping date of the products.
The second tactic to be employed by the company is co-mining. In an effort to power mining farms that have power resources but not enough equipment to run at peak capacity, the firm will be offering co-mining agreement that rents its flagship AntMiner products for a year.
Bitmain would also be covering the year-round electricity cost at 0.35 Yuan ($0.05) per kilowatt-hour while mining farm operators would be in charge of maintaining the equipment.
As a part of the deal, Bitmain would be eligible for 75 per cent of the mining profits. However, if the mining revenue is less than the electricity cost, all the mined coins would go to Bitmain.
Alongside this, Bitmain is betting that Bitcoin’s price will jump post halving next year. To address miners concerns regarding Bitcoin volatility, Bitmain is giving out a put option for customers that make product orders in large quantities. The Put option would allow miners to sell Bitcoin at $5000 on March 27. If the price of Bitcoin falls below $5000, customers could exercise this option to make a profit and Bitmain would bear the cost.
Even though this strategy seems a bit risky considering Bitmain’s current state, it looks Wu is quite confident regarding this move. It’s now a matter of time before we find out if this new strategy could pull Bitmain out of the fix they’re in as Wu had previously said:
‘I have to come back to save this ship (from sinking).’