Bitmain May Soon Cut 50% Of Staff Ahead of Bitcoin Halving
At a time, Beijing-based cryptocurrency mining company Bitmain was easily the largest Bitcoin-related company, sporting a valuation of (at least) $14 billion in the Chinese private equity markets.
Though, since it secured such valuations in 2018, Bitmain’s business has slowed in a spectacular fashion seemingly due to three reasons:
- The price of Bitcoin, despite it recovering since the 2018 bear market, is still much lower than it was two years ago;
- Other companies have entered the cryptocurrency market, producing machines that are comparable to Bitmain’s ASICs;
- Internal disputes within Bitmain, specifically those between its founders, have likely driven profitability lower.
This slowdown resulted in the company cutting hundreds of positions at the end of 2018, per various reports. Bitmain itself claimed that these layoffs were conducive to the success of its business, adding that they would continue to hire talented individuals to help grow the company.
Despite this, it appears that Bitmain’s prospects are getting harrowing once again, with reports from Chinese media indicating that another purge of its workers may be on the horizon.
The reason: Bitcoin’s impending block reward reduction (better known as the “halving”), slated to take place in May of this year, is expected to affect Bitmain’s business.
Bitmain May Purge 50% of Staff… Again: Chinese Media Report
Per the report, which came from Chinese media company Wushuo Blockchain and was shared on financial information portal Sina Finance, Bitmain at the end of 2019 commenced a “staff optimization plan.”
This news, which came from “several people familiar with the matter,” said that the optimization will affect up to 50% of Bitmain’s current staffers. It currently isn’t clear how many staff Bitmain has, though the report suggested that the Bitcoin firm has “more than 1,000 people.”
As to why this is taking place, the Wushuo report cites the “pressure of the Bitcoin halving,” which will effectively halve the revenue of miners. Also, Bitmain co-founder Jihan Wu was quoted as saying last year that he is skeptical a cryptocurrency bull run will follow the halving, which would be a first for Bitcoin.
This new of a potential layoff has been corroborated by Dovey Wan, a cryptocurrency venture capitalist best known for her sharing of news regarding China’s Bitcoin and blockchain scene. She wrote on Twitter that “Bitmain is going to further cut half of its personnel by Chinese New Year,” before wittingly adding that this may be the “first ‘halving’ of 2020.”
Earlier than Bitcoin halving, Bitmain gonna further cut half of its personnel by Chinese New Year
this might be the first "halving" of 2020 I guess ..
It's commonly beautified as "人员结构优化" (employee structure optimization) for Chinese companies
— Dovey 以德服人 Wan
(@DoveyWan) January 1, 2020
It is unclear how this seeming layoff will affect Bitmain’s ongoing plans to list some of its shares on public markets in collaboration with Deutsche Bank.
Bitcoin Halving to Be Bullish?
Although Bitmain is planning these cuts in a seeming expectation that the halving will be bearish for Bitcoin, in that the market won’t be able to support new miners — creating a case in which prices crash again, miners stop mining, leading to uncertainty around Bitcoin’s future and, as such, its price — many analysts expect for BTC to outperform before and after the block reward reduction.
Per previous reports from Blockonomi, PlanB’s stock-to-flow model (accurate to a 95% R squared, which relates BTC’s market capitalization to the scarcity of the asset, found that the leading cryptocurrency will have a fair market capitalization of $1 trillion following the 2020 halving. By simple supply-demand economics, this makes sense. If there is a decrease in emission and stable or growing supply, the price of an asset should increase with time.
So should Bitcoin see strong rallies during and around the halving as the analysts expect, Bitmain may be able to weather the storm just fine,
The post Bitmain May Soon Cut 50% Of Staff Ahead of Bitcoin Halving appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow