Bitcoin Mining Company Bitmain Is Divesting Off Their BCH holdings: An Inside Look Study


Bitmain Divesting Off Their BCH Holdings: A study

Karl Marx, the father of socialist thought, had repeatedly voiced concerns about how capitalism reduced a person to just a cog in the grander scheme of things for other people. He had seen and predicted the cyclic nature of this sort of economy, with hirings to maximize production and firings in tougher times. This was inevitable and Marx once quipped, “History repeats itself, first as tragedy, second as farce.” That maxim is proving itself again as reports filter in that Bitmain is looking to downsize its staff at their headquarters.

According to various sources in the Chinese media, Bitmain Technologies, a privately owned company that designs application specific integrated circuit (ASIC) chips for bitcoin mining, is looking to possibly let go around 700 employees from their Beijing Headquarters.

This comes at a time when rumors are flying thick and fast. According to some insiders more than half of the 2000 strong workforce could have their jobs on the line. While the company shut the doors to their operations in Israel some time back, they have also pulled the plug on fundings for many Bitcoin cash developers.

What Is Happening?

The market has seen a steep downturn the past few months. As the prices kept decreasing the problems for miners kept increasing. To compound matters, a recent report showed that about 50% of BTC’s mining hash are now bankrupt, those remaining are operating at marginal losses, at least.

While old miners going out of service or selling on is common; they always have new ones appearing. However, for the manufactures of the hardware, recent fall in prices has seen a significant fall in demand.

How Is Bitmain Coping?

The largest crypto miner and manufacturer started off small in 2015. However, throughout 2016, they kept accumulating their hash considerably. The company started to sell their holdings and had an almost fire sale in 2017, just as China was looking to ban all crypto exchanges.

That same year, as the markets went from strength to strength, Bitmain again began ‘hodling' all their mined cryptos. There are no recent reports published on the companies economic health, thus there is a fair bit of conjecture based on research and market news. As far back as March this year, the company had been doing extremely well, even when they sold more than $200 million worth of BTC.

Bitmain: Trader Or producer

It is curious to note how Bitmain seems to behave in the market. When the prices are up and healthy, the company looks to accumulate crypto assets. However, in times of a downturn, they are rather quick to sell.

Usually one would expect the opposite, with lower demand encouraging producers to sell less while increased buying interest would encourage slow selling. Traders, on the other hand, would look at other consequences and make different decisions, something that Bitmain seems to do.

In a BCH address purportedly belonging to Bitmain, a similar thought process can be observed. It appears that the mining firm kept all their BCH and in fact added to it. That was untill two major sales. One was in the middle of June when about 200,000 BCH were released. The second was just before the hard fork on 14th November.

The Crash Of November

While not many saw the nosedive in prices coming, the panicked or premeditated selling of crypto assets at this time did little to help. It is impossible to say with complete certainty, but it seems around 270,000 BCH were sold from the alleged Bitmain account. This has confused many as it makes little sense to move assets at the onset of a fork. It would make absolute sense for a trader though who is expecting a hash war and looking to cut their losses.

Either that or the tumbling prices forced the company's hand and they had no other alternative. A myriad of factors might have conspired to force them to take such an extreme step. Not many had expected a serious hashwar until the end of October when it became apparent that neither side was in the mood for a negotiated fork. Add to that Bitmain looking to add a further 90,000 new ASICs, at a time when their competitors were releasing more powerful machines.

Where Are They Now?

It has been estimated, this calendar year, has seen the company post a loss of about $700 million. As the prices crashed the viability of crypto mining has taken a hit. Coupled with stiff competition and the collateral damage from a hash war, the prognosis is not good. They seem to have little by way of new revenue from sales and have had their asset reserves losing value by more than 80 percent. In context, it might not seem that extraordinary anymore that the company is looking to downsize.

All Gossip No Facts

There have been rumors about another Bitmain Bitcoin Cash wallet. The address again shows the same mentality as displayed by the other accounts. Here again, around 275,000 coins were being quickly offloaded. Whether it was the impending fork, the cost of getting the new ASIC though for delivery or other demands is unknown. It has been suggested they were sold over the counter, giving a boost to the buyer but further plunging the market downwards.

Final Thoughts

While the company still have a fair stash of BTC, they are also expected to have banked some fiat as well as other cryptocurrencies. However, the instability of the crypto market is something that would have made an undeniable impression on the company and its fortunes. The enmass firing of staff is not something companies do on a whim, they are after all aware of the signal it sends to everyone. When the assets of a company are reduced as drastically as we have noted here, it is little wonder that such drastic measures are needed.

However, this might not be the end, as a streamlined process with a core group of employees might help the sagging fortunes of the company. Nonetheless, a change in the plan of action is essential and an injection of fresh ideas would be most welcome.

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