Is Bitmain’s Financial Troubles Connection At The Root Of Bitcoin Cash’s (BCH) Loss In Value?
Are Bitmain’s Financial Troubles The Root Of Bitcoin Cash’s (BCH) Loss in Value?
Much of the community for cryptocurrency finally was able to take a moment to relax after the hash war involving two blockchains on Bitcoin Cash finally ended on November 24rd, after 11 days. Two specific groups in the BCH community couldn’t seem to settle on which blockchain would be dominant. After forking the blockchain, Bitcoin Cash was ultimately divided into Bitcoin SV and the formerly-named Bitcoin ABC. The ABC blockchain was warded the original Bitcoin Cash ticker (BCH).
Jihan Wu, who supported the ABC blockchain, is also the CEO of Bitmain. Bitmain’s primary focus is on creating Bitcoin mining chips, though it is also in charge of BTC.com and AntPool, which are two of the biggest mining pools in the world. However, Bitmain was showing signs of trouble before the Hash Wars even began.
The first indication that there was some struggling for Bitmain was during a board reshuffle, causing Wu to be removed from his seat as the board’s executive director. Instead, the new director became Zhan Ketuan, though there has yet to be a reason for the reshuffle in the first place. Still, the fact that 90,000 miners were urgently sent to Xinjiang for the mining of Bitcoin Cash ABC at the time may not have been a coincidental action.
When the Hash Wars finally ended, rumors of a $740 million loss during Bitmain’s third quarter started flying. Without including the cost of the Hash Wars as well, these unconfirmed losses suggested that there was an upcoming IPO that the executives of Bitmain would use as an exit strategy. Bitmex’s research team believes that the amount of the loss from the BCH Hash Wars was approximately $10 million. With the conditions of the crypto market at the time, Bitmain decided to also close down their development center for blockchain technology in Israel.
UnitedCorp didn’t take the ending of the Hash Wars sitting down. They quickly sued Bitmain, along with Bitcoin.com, Kraken Bitcoin Exchange, and Roger Ver, accusing them of taking over the Bitcoin Cash Network after the hard fork. There were also subsequent rumors that Bitmain was trying to remedy all of these losses with a sale of their BCH stash, seeking for a way to fulfill their $600 million alleged debt.
The twitter user spurring these rumors posted an image of the potential sale, adding, “No-Action speaks louder than words. Its clear Jihan has abandoned the BCH project. And not just that, info we have Bitmain is secretly liquidating its BCH stash to pay off supplier debts – some $600 mln.” This was also the user that told the public about the third quarter losses.
In a subsequent tweet, the same user said,
“PREDICTION: Bitmain will finish the year with NEGATIVE $1,2-$1,5 BLN NET INCOME and cement its place as most money losing company in the industry.”
If all of these rumors and allegations are confirmed by Bitmain, it could be the reason that the coin has managed to fall by over 80% this month, bringing it down from the #4 spot to the #7 spot.