Bitmain's power struggle may be at an end, should the Jihan Wu team accept a buyback offer by Micree Zhan. According to a recent letter by the recently ousted Bitmain Co-CEO, he is willing to buy Wu's shares at a company valuation of $4 billion. This comes as the control battle for Bitmain intensifies after Zhan regained the Beijing office earlier this month.
The alleged Zhan letter – which was first shared on Chinese media – highlights that Wu acted illegally during the ousting process. Zhan owns 36% of Bitmain's shares, making him the largest shareholder.
Consequently, he enjoys majority voting rights of up to 60%; hence any decisions without Zhan's consent are considered ‘illegal.' While this is the case, Zhan was still ousted after Wu claimed to have held a shareholder meeting in the Cayman Islands. Zhan has since condemned the move as illegal based on Bitmain's shareholder structure and voting rights:
“WITHOUT MICREE'S CONSENT, NO ONE CAN CHANGE THAT LEGALLY. BUT JIHAN FORGED A SHAREHOLDER'S MEETING RESOLUTION SAID HIS 10X VOTING RIGHT NO LONGER COUNTS, AND FIRED MICREE AS THE COMPANY DIRECTOR. BUT MICREE SAID IN THE ANNOUNCEMENT, THAT SHAREHOLDER'S MEETING NEVER HAPPENED.”
A Response to Bitmain Hong Kong
Zhan's response has coincided with Bitmain Hong Kong's move to cut Beijing from its chips supply chain. The Hong Kong headquarters, and also in charge of Bitmain Beijing, reports to the Cayman Islands holding entity but is currently controlled by Wu's team. The subsidiary posted on its website that it is suspending chip supplies to Bitmain Beijing following Zhan's takeover:
“Bitmain Hong Kong has suspended the chip supplier for the time being to Century Cloud Core, which is now controlled by Zhan's relatives, until we are assured, through negotiation with Zhan's relatives, that they are committed to protecting the interest of Bitmain's customers and the company as a whole.”
This supply chain war, however, seems to have started earlier when Zhan took the helm of the Beijing office. The ousted CEO interfered with the supply of mining equipment from Bitmain's Shenzen factory to clients, an issue that forced Wu's team to clear the air noting that all is well.
Since then, tensions have been high given the events that unfolded during the Beijing office takeover, coupled with pending legal battles in Hong Kong and the Cayman Islands.
Bitmain's Value Sliced Significantly
As one would expect, uncertainty caused by Bitmain's control brawls has affected the company's value.
Just two years ago, its valuation could have gone as high as $14 billion as it prepared to launch an IPO. Today, the value was reduced by over half and might be heading towards the $1 billion recorded during Bitmain's Series A funding back in 2017. However, if Zhan and Wu agree, Bitmain could regain its glory days.