Bitmain Puts Its Mega Mining Facility Project in Texas on Ice

Since December 2018, Bitmain has fired employees in both its R&D and Bitcoin Cash development department. Reports indicate that its bet on Bitcoin …
Texas BitmainNews

Osato Avan-Nomayo · @3rdPesinSingula| Jan 11, 2019 | 15:00

Bitmain Technologies is shelving its plans to create a mega Bitcoin mining facility in Rockdale, Texas. The news comes as the Bitcoin mining behemoth continues to downsize both the scale of its operations as well as its staff numbers.

$500 Million Bitcoin Mining Project on Hold

According to Texas Public Radio (TPR), Bitmain his suspending its plans to build a $500 million crypto mining and data center in Rockdale. Commenting on the news, Steve Young, the Milam County Judge, said:

I’m really disappointed because we had advertised this. We had waited for this and had wanted this. We had welcomed this. This was huge. We need some positive news here and some jobs here. We need a tax base here, and this was a step in the right direction.

Back in mid-2018, the company announced plans to build one of the largest Bitcoin mining centers in North America. At the time, Bitmain said the facility situated on the Alcoa aluminum smelting site would commence operations in 2019, providing as many as 500 jobs.

For Young, the news is yet another blow to the local economy of a place struggling to attract investments. Dave Barkemeyer, a former Milam County Judge, says the county has lost about 30 percent of its tax revenue in the last ten years.

Massive Downsizing of Operations

As at press time, Bitmain is yet to issue any official word on the matter. However, a spokesperson for the company intimated that Bitmain was in the process of downsizing its operations across the United States. In an email reportedly sent to Young, the spokesperson said:

The right-sized team at Rockdale now has the expertise to re-start the project at small scale anytime. Bitmain would like to ramp up the site at a slower pace and scale based on market conditions.

According to Young, Bitmain had already made some significant progress on the facility with as many as 8,000 servers running into millions of dollars already on site.

Meanwhile, the company continues to make the rounds on the cryptocurrency news circuit with reports of retrenchments across various departments. On Thursday, Bitcoinistreported that the company will be getting a new CEO as the co-founders step down from administrative duties.

Bitmain losing dominance = more decentralisation

– Laying off 50% staff (reported)

– Mining pool dominance down 28% in last 6 months

– Poor bet on BCH at the cost of losing BTC

– Lost key chip designer

– ASICs losing competitive edge

– Growing competition (Canaan, Halong, Ebang)

— Misir Mahmudov (@misir_mahmudov) January 8, 2019

Since December 2018, Bitmain has fired employees in both its R&D and Bitcoin Cash development department. Reports indicate that its bet on Bitcoin Cash 00 which backfired coupled with the massive decline in cryptocurrency prices saw the company record losses north of $700 million in Q3 2018 alone.

Consequently, Bitmain, once the undisputed giant in Bitcoin mining arena is slowing having its monopoly eroded. Back in mid-2018, the company’s mining pools; and AntPool were approaching nearly 51 percent control of total BTC mining hashrate. Presently, both pools account for 24 percent.

Will the current situation with Bitmain lead to a less monopolized Bitcoin mining arena? Let us know your thoughts in the comments below.

Image courtesy of Twitter (@misir_mahmudov), Shutterstock

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Bitmain Replaces CEO Jihan Wu After Bitcoin Cash Gamble Fails

Wu, in particular, has come under intense criticism for the company’s bet on Bitcoin Cash. Zhan, on the other hand, has led Bitmain’s diversification …
Bitmain WoesNews

Osato Avan-Nomayo · @3rdPesinSingula| Jan 10, 2019 | 08:00

Inside sources say that Bitmain Technologies plans to name a replacement CEO to take over from co-founders Jihan Wu and Ketuan Zhan.

New Bitmain CEO

According to the South China Morning Post (SCMP), the Bitcoin mining behemoth is looking to name a new CEO to replace the company’s co-founders. Anonymous sources say, Haichao Wang, the current Engineering Director is the front-runner for the job.

Jihan Wu

While there is no official word from Bitmain, these sources say the company entered a leadership transition period in December 2018.

Back in November 2018, Bitcoinistreported Wu’s demotion from director to a supervisor. Also, in late December 2018, reports broke out in Chinese media of the imminent resignation of both Wu and Zhan.

There is also no definite timetable for the completion of the leadership reshuffle. Sources indicate that both Wu and Zhan will become co-chairs of the company. The new CEO will handle the daily administration of the firm while the pair will still have the final say on big decisions.

According to SCMP sources, both Wu and Zhan had disagreements as co-CEO. Wu, in particular, has come under intense criticism for the company’s bet on Bitcoin Cash. Zhan, on the other hand, has led Bitmain’s diversification efforts, especially into the artificial intelligence arena.

Turning the Tide

If the reports are accurate and Bitmain does get a new CEO, a daunting task awaits the selected individual. After a stellar 2017 and a promising start to 2018, the second half of the year appeared to fizzle out for the Bitcoin mining behemoth.

Bitmain is yet to release its Q3 2018 financial report, but speculation is rife of losses north of $740 million. A lot of the financial trouble stems from inventory losses, as well as the expensive Bitcoin Cash hash war of November 2018.

Recently, the company even began laying off a significant portion of its workforce. In December 2018, Bitmain fired its R&D department based in Israel. This move was followed by another massive downsizing, nixing the company’s Bitcoin Cash development team.

The company’s IPO plan is also another casualty of the financial turmoil within the company. Despite announcing plans for an IPO listing in Hong Kong earlier in 2018, all signs point to such plans being unfeasible, for the present time, at least.

Will a new CEO be able to steer Bitmain in a better direction? Let us know your thoughts in the comments below.

Image courtesy of Shutterstock

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Bitmain Lowers Profit Figures in IPO Filing

… profit figure was $1.25 billion in the documents prepared ahead of Bitmain’s $400m Series B fundraising, that was lead by Sequoia Capital China.

The profits of the China-based Bitmain Technologies group may be substantially lower than the initial estimates provided in the documents related to early-stage funding rounds, The Financial Times reports.

The upcoming IPO

Bitmain, the world’s largest manufacturer of cryptocurrency mining equipment, applied for an initial public offering on the Hong Kong Stock Exchange ( HKEX) in September 2018, with the stated aim of raising as much as $18 billion. However, 2017 net profit figures provided by the company ahead of different rounds of financing differ substantially with the apparent downward trend.

The 2017 net profit figure was $1.25 billion in the documents prepared ahead of Bitmain’s $400m Series B fundraising, that was lead by Sequoia Capital China. In August 2018 round, the profit was reduced to $1.1 billion, while in the most recent IPO prospectus, Bitmain reduced its net profits for 2017 to $701.4 million.

Dim future

While both the company’s/ press-service and the auditors failed to explain the discrepancies on the request submitted by the Financial Times, investors expressed divergent opinions about the profit figures and the Bitmain’s future in general.

“The differing figures show that management doesn’t know how to communicate with the capital markets. It just shows that they are not sophisticated enough and maybe too aggressive,” a China-based investor commented.

Most experts believe that the success of the company hinges on its ability to outgrow its current status as a chip manufacturer for cryptocurrency mining, which is regarded as a speculative business with little-to-no intrinsic value.

Cryptocurrency assets value

As Bitmain accepts payments for its equipment cryptocurrencies, the digital coins represent a significant share of the company’s assets – 28% according to the IPO prospectus. However, it is not clear how to assess the value of these holdings considering the volatile nature of the cryptocurrency market.

At the end of June, Bitmain stated that its crypto holdings made of Bitcoin, Bitcoin Cash and Ethereum were worth $886.9 million. But the industry experts, including David Vorick, of Siacoin, are skeptical about it, saying that the estimate is overly optimistic.

Along with vague profit numbers, this casts some doubt on the fairness of the company’s valuation and on its perspectives to hit its fundraising targets.

Investors claim Bitmain provided false information regarding funding

One of the versions of the pitch deck signified that the company had “completed a $400 million Series B round of financing from Sequoia Capital, DST …
Investors claim Bitmain provided false information regarding funding 25777


Oct 26, 2018 at 6:40 PM

Bitcoin mining giant Bitmain Technologies is caught in yet another controversy, as fresh allegations have emerged which claim that Bitmain investors received a false pitch deck. According to a report by CoinDesk, the pitch deck indicated that the company had secured funding from Digital Sky Technologies (DST) Global and GIC Pvt Ltd.

The mediahouse stated that it was unable to confirm the authenticity of the pitch deck even though in all three versions received by CoinDesk, each slide contained the company name and a confidentiality warning. Two of the versions included deadlines and bank wiring instructions.

One of the versions of the pitch deck signified that the company had “completed a $400 million Series B round of financing from Sequoia Capital, DST and GIC, with a pre-investment valuation of $12 billion”. CoinDesk obtained the pitch deck from a source familiar with the matter who did not give any proof regarding the same.

Another unnamed source claimed that Bitmain published another version of the pitch deck, which stated that the company had “raised another $400 million at a $12 billion valuation from investors such as Sequoia China, GIC and DST in a Series B round”. The source obtained his/her copy of this version after it was distributed to the public via social media discussions and private email exchanges.

In an earlier emailed response to BCFocus regarding its alleged investment, DST Global had clarified that the company has not invested in Bitmain. The crypto mining firm did not immediately respond to requests for comment regarding the latest allegations.

Bitmain’s revenue figures suggest that the company is doing remarkably well. It has established itself as the largest mining company in the world and has become the standard for ASIC mining rigs.

The company earned $2.5 billion in revenue last year and clocked in a net profit of $1.1 billion in just the first quarter of this year. Bitmain earns roughly 96% of its revenue from the sale of mining rigs while the rest is earned from cryptocurrency mining and other services. The firm recently disclosed that its popular Antminer mining rig accounts for a massive 85% share of the global market for mining rigs.

The new controversy might affect the company’s plans to go public soon, as the firm had filed for an initial public offering (IPO) on the Hong Kong exchange in September. According to reports, the IPO is expected to raise $18 billion, valuing the company at around $40-$50 billion.

See also:

Coinbase escapes Bitcoin Cash blame only to face fresh allegations for 0x Listing

Bitfinex slams report alleging fake volumes for ‘non-existent’ USDT/USD

Image via Shutterstock

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Bitmain CEO Jihan Wu, Co-founders And Executives Join The Richest People In China List (2018)

Recently, the firm closed its Series B funding round, raising about $400 led by Sequoia Capital China. The fundraising was part of Bitmain’s wider …

Bitmain’s dominance in the cryptocurrency mining industry has once again come to the fore, thanks to the 2018 list of China’s richest people.

According to the Hurun Research Institute, there are five new billionaires on its 2018 Hurun Rich List. Per the list, China’s wealthiest club now includes the company’s founders, CEO, and Vice President, with a reportedly combined value of nearly $9 billion.

Co-founder Ketuan Zhan owns 36 percent of Bitmain and is worth over $4 billion. CEO Jihan Wu, the most prominent face of the mining giant, owns 20.25 percent of the firm and is valued at over $2 billion.

Co-founder Zhaofeng Zhao owns about 6.26 percent of the company, with Hurun valuing him alongside company execs Yuesheng Ge and Yishuo Hu at just under $1 billion. However, the three still make the billionaire rich list when valued in Chinese Yuan.

Other notable crypto-related names on the Hurun Rich List for the year are:

  • Changpeng Zhao, Binance (exchange)
  • Xu Mingxing, OKCoin (exchange)
  • Li Lin, Huobi (exchange)
  • Li Xiaolai, BitFund (investment)
  • Nangeng Zhang, Caanan Creative (mining)

Forbes named Ripple co-founder Chris Larsen among its 400 wealthiest people whose wealth comes exclusively from cryptocurrency investments. He is valued at about $2.1 billion.

Bitmain Technologies is the world’s leading maker of ASIC chips and the biggest Bitcoin mining company. Bitmain launched its operations in 2013 and has since developed into the biggest manufacturer of ASIC miners.

The Chinese firm also owns two of Bitcoin (BTC)’s top mining pools in Antpool and Earlier this year, the firm’s hold on the overall hashrate for bitcoin mining came dangerously close to 50 percent, raising questions about the potential for a 51% attack.

The company’s hold on the ASIC chip market currently makes up for about 70 percent of the market, valued at over $2 billion. The company has been aggressive in its expansion efforts, raising almost $800 since the beginning of 2017.

However, it’s in 2018 that Bitmain’s plans to continue dominating have come to the fore. It has invested in a number of startups and revamped its chipsets.

Facing competition from startups like Canaan Inc., Bitfury, and Ebang, the Beijing-based crypto monolith has invested more in its ASIC chips, including in the latest next-generation 7nm BM1391 ASIC chip.

Recently, the firm closed its Series B funding round, raising about $400 led by Sequoia Capital China. The fundraising was part of Bitmain’s wider pre-IPO efforts, with a listing on the Hong Kong Stock Exchange its ultimate goal.

Bitmain earned revenues of about $4 billion in 2017, and despite the decline in crypto prices in a bearish 2018, analysts estimate that the firm will still be profitable. Revenue earnings of for the year are expected to be closer to $10 billion, bringing its valuation to around $18 billion.

With the need to stem criticism and temper fears about its financial status, the firm released its first-ever financial disclosure after a KPMG audit. It is expected that the IPO will proceed sometime later in the year or in Q1 2019.

To reach that goal, Bitmain has to navigate the negativity surrounding its pre-IPO investors, most of whom have tried to distance themselves with the mining giant.

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