Bitmain Layoffs Mean Bad News for Bitcoin Cash and Litecoin Per Early Crypto Investor Kyle Samani
Bitmain has been hemorrhaging workers left and right, in response to the market that keeps declining. In light of the most recent round of layoffs, there’s a chance that this could be bad news for Bitcoin Cash and Litecoin, according to Kyle Samani. Samani is a well-known investor in the crypto industry.
This venture capitalist took to Twitter to bring light to some rumors that the Bitcoin mining company is running low on the funding that would allow it to continue with mining and blockchain advancement. The Chinese firm, as a result, have been downsizing, and it is possible that they will end up dumping the crypto that they are holding, which means a lot of Litecoin and Bitcoin Cash would be sold off at one time.
Samani’s tweet reposted a comment from Samson Mow, who said that there’s a risk that Bitmain is looking at 85% of their workers being laid off, rather than the 50% that they claim. In response, Samani said,
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 theory that Samani has about Bitmain is based on an alleged financial report that came out several months ago. Though the validity is being debated, this report alleges that Bitmain was in possession of 931,000 Litecoin and 1 million Bitcoin Cash at the time. With the present exchange rate, this would mean that they are holding $28.6 million in LTC and $177 million in BCH. So far, there has been no confirmation or denial from Bitmain on these holdings.
In the report, there are multiple other digital assets that Bitmain appears to be in possession of, which is about $316 million in these reserves. Bitcoin, Dash, and Ethereum account for over $110 million of these reserves, assuming that Bitmain hasn’t already sold any of it.
Currently, there are a few certain changes. First of all, Bitmain has let go the entire team that runs Copernicus, which was working on the creation of a new client for Bitcoin Cash. This occurred just after Bitmain decided to side with Bitcoin Cash ABC during the hash war. Again, though Bitmain has confirmed nothing, the fact that they put their mining support behind this side could be the root of millions of dollars’ worth of losses. To make matters worse, Bitcoin Cash has seen a 60% drop in their value since November.
One Twitter account that is known for his negative posts, BCTKING555, says that the company claimed to have lost $740 million in their third quarter, not counting the losses incurred by the fork. Claiming the details came from public information, BitMEX Research claimed that Bitcoin Cash probably posted losses like these in the second quarter too, leading to a lack of stability.
Even though there is a possibility that the layoffs could manage the outward flow of funds in the short term, the company seems to be looking at a Hong Kong IPO as a way to support themselves. However, the crypto exchange in Hong Kong is less than ecstatic about the current state of cryptocurrency, which means that there is a chance that the IPO will not be approved.
Next up for the company, Bitmain may have to seek out assistance from venture capitalists for more funds. However, there is also a chance that selling their digital assets could keep them above water. After all, Bitmain is holding over 60% of the entire mining market at the moment.