Beijing-based cryptocurrency mining giant Bitmain is casting its decision to layoff as many as 50 percent of its employees in a positive light.
In a recent blog post by the company that reflected on 2018’s accomplishments and layed out expectations for the year ahead, the company said that it just had too many great things going on: “our wide portfolio and varied lines of work have expanded to a point where we have the problem of choice and this year was the time to choose.”
“We started to optimize the business and streamline our flows to focus back on the core missions and activities that best rally behind our vision,” the post continued.
Reading between the lines here, however, one realizes that the words “optimize” and “streamline” actually refer to the sacrifices that the company has made – presumably because of decreased mining profitability.
Bitmain Has Plans to Cut Up to 50 Percent of Its Employees
Although the layoffs are not the only public sacrifice the company has made, they have perhaps rung the most alarm bells across the industry and the media.
Rumours that the company would be getting rid of employees first emerged on Maimai (China’s LinkedIn) on December 17, where an anonymous user publicly asked for information about a possible upcoming layoff at Bitmain.
Eventually, a verified Bitmain staff member replied that “it’s affirmative. The layoff will start next week and involves more than 50 percent of the entire Bitmain’s headcount.” Another verified staff member said that “some departments [will] have to be let go entirely.” In late December, a headcount revealed that Bitmain had roughly 2600 employees–a 50 percent layoff would leave 1300 people without work.
there’s post on Chinese Linkedin (usually very high accuracy, posted by employees themselves) saying Bitmain will start a layoff the coming week … ???
A separate rumor said the plan is for more than 50% of its headcount ???! pic.twitter.com/b0ZSBuPX4d
— Dovey Wan ? (@DoveyWan) December 23, 2018
Market Cap of Meme Cryptocurrency Dogecoin Spikes to Unprecedented LevelGo to article >>
And indeed, the first departments started to ‘go’ in December 2018. Bitmain’s Israeli operations were shut down. Then, the entire team that was responsible for developing the Bitcoin Cash ‘Copernicus’ client was unceremoniously sacked.
Several weeks later on January 10, Texas Public Radio reported that the company had shut down its Rockdale, Texas mining operation indefinitely. At the time of the shutdown, the Rockdale facility employed five individuals, down from 15 at its height.
Bitmain’s Control of Mining on the BTC Network Shrinks
The layoffs and cutbacks have been reflected in a decrease of Bitmain’s dominance in mining power on the Bitcoin network.
At its height, Bitmain controlled over 51 percent of Bitcoin transaction confirmations. Now, according to Bitcoin research company Bitaps.com, it controls approximately 21 percent through its subsidary mining pools, Antpool and BTC.com.
While this is good news for BTC hodlers in that the Bitcoin network is more decentralized than it has been in months, this is just another piece of evidence that Bitmain is in decline.
Last 24 hours distribution. The mining distribution is almost such that the miner’s share is no more than 10%, and, accordingly, 6 network confirmations provide complete protection against a double spend attack. #bitcoin #decentralized pic.twitter.com/L56IlaSCgo
— bitaps.com (@bitaps_com) January 16, 2019
The Crypto Mining Industry Faces Decline as a Whole
Bitmain isn’t the only major mining company to recently announce cutbacks. On December 26, a spokeswoman for cryptocurrency exchange Huobi said that the company would be “optimising staffing by cutting its worst-performing employees,” but did not say how many that employees that would be.