Journalist: April Cho, Editor: Tong Tong
In the last year, the blockchain industry has faced a slowdown that has resulted in a 170 billion dollar decrease in bitcoin’s market value in just one year. December has been a tough year for many blockchain and crypto companies, but especially so for mining hardware giant Bitmain.
The effects of these changes on the company were evident at the end of 2018. In December of 2018, the company laid off more than 50% of its workers. At the same time, the company is currently facing a $5 million class action lawsuit in the North District Court of California.
Bitcoin’s steep price decline is reflective of an overall decline in the digital currencies market. Rumors about a widespread layoff by digital currency hardware company Bitmain began to circulate on social media accounts like WeChat and Twitter as early as December of 2018. This twitter post was one of many social media posts that echoed the sentiments of many Wechat reports that suggested that Bitmain would be laying off more than 50% of its 2,500 workers.
These labor cuts were in conjunction with cuts in the massive operations of the two companies at the end of 2018. According toGlobes, an outlet covering business affairs in Israel, crypto market conditions forced Bitmain to shut down its Blockchain Development Center in December 2018. Gadi Glikberg, a VP at Bitmain, left along with the 23 employees associated with the center.
At the same time, Bitmain is facing a class action lawsuit from LA County resident Gevorkyan. The lawsuit accuses Bitmain of “benefitng -- without authorization—from the lengthy ‘initialization’ period that its ASIC devices need for set up” . Fundamentally, the lawsuit claims that Bitmain routed any bitcoin mined during the hardware set-up process to the company.
Perhaps more importantly, Bitmain has been working to undergo an IPO in Hong Kong. The current lawsuit and layoffs will not help in dissipating the widespread belief in the volatility of cryptocurrency and affiliate businesses. Indeed, according to SCMP, Hong Kong stock market regulator has suggested it is “premature for any cryptocurrency trading platform- or business associated with the industry—to raise funds through an IPO… before a proper regulatory framework is in place.”
Bitmain faces a tough year ahead.These unfavorable factors, along with the broader macro-trends have put Bitmain in a tough spot for 2019. US-Chinese trade sanctions will affect the mining rigs trade and an overall decline in the digital currencies market place Bitmain against the tide of global trends. Cuts to the swaths of funding that characterized the early part of 2018 will require Bitmain and other companies to refine their core missions. However, as some blockchain insiders suggest this refinement might be just what the industry needs in the new year.
