Bitmain, the Chinese mining hardware manufacturer who recently applied for listing on the Hong Kong Stock Exchange, has laid off around half of their employees, the company confirmed in a statement:
“There has been some adjustment to our staff this year as we continue to build a long-term, sustainable and scalable business. A part of that is having to really focus on things that are core to that mission and not things that are auxiliary.”
A discussion surrounding the layoffs had started on Maimai, a Chinese website similar to LinkedIn, on December 17th, reports Altcointoday. Since then, the post has garnered around 200 replies, some of which were even from Bitmain employees. There, one verified employee revealed that “the layoff will start next week and involves more than 50 percent of the entire Bitmain’s [sic] headcount.”
“Some departments have to be let go entirely,” said another employee.
An anonymous source from Bitmain China reported to CoinDesk that “the whole thing certainly couldn’t be handled in just one day given the total number could be large.” The source continues, stating that “this is an operational adjustment. Some projects will be entirely gone so it’s hard to calculate a precise percentage at this stage.”
Interestingly, these changes aren’t based on the bearish market alone, reports the source. Because of Bitmain’s rapid expansion this year, they would have had to reorganize at some point anyway.
This could spell the potential downfall of Bitcoin Cash and Litecoin according to crypto venture capitalist Kyle Samani, reports CCN.
Fighting To Stay Afloat
The reason for Samani’s prediction is that Bitmain could be running out of money, and the group may not be able to afford to keep afloat. So, to remain in business, Bitmain may have to sell off their substantial BCH and LTC holdings tweeted Samani:
This is extremely bearish for BCH and LTC
The only reason to make cuts this drastic are because you’re about to run out of cash
Meanwhile, they still have 1 BCH and 1M LTC on their balance sheet. Those are going to be liquidated soon to keep the lights on https://t.co/kneSRcK2li
— Kyle Samani (@KyleSamani) December 26, 2018
The VC’s analysis is partly based on an alleged Bitmain financial report leaked in August this year. If the numbers are to be believed, it would mean that Bitmain holds around 931,000 LTC and 1 million BCH, worth approximately $28.6 million in Litecoin and $177 million in Bitcoin Cash.
The document also shows Bitmain holding Bitcoin (BTC), Dash (DASH), and Ethereum (ETH) in its portfolio as well. Their holdings are allegedly $84 million, $26 million, and $142,000, respectively. If they had kept their holdings since August, Bitmain holds around $316 million in cryptocurrencies.
If these reports are to be believed, Bitmain has gotten rid of its entire Copernicus team – a group developing a new Bitcoin Cash client. Some of these members had just started at the company, and had reportedly been laid off just in time for Christmas, reports CCN.
From Bad To Worse
BitMEX Research also reported on potential losses for Bitmain in Q2 of this year despite their successful Q1.
If the company is really holding as much as is rumored in BCH and LTC, we can expect investors to be wary of the future of their digital asset holdings. However, we might also expect Bitmain’s layoffs to potentially right the ship, at least for now. As of now, the group still holds over 60% of the cryptocurrency mining market.
The CoinDesk source claims that these layoffs are affecting all divisions of the company, with mining seeing the most damage:
“It’s not hard to infer which division is suffering the most. Bitmain’s core business is making miners. Other business lines are just blockchain and artificial intelligence.”
Bitmain isn’t the only cryptocurrency group to suffer readjustments. ConsenSys and Steemit are two other prominent spaces are also suffering due to the bear market. Bitmain is still hiring, however.