Bitmain, the Chinese cryptocurrency mining corporation, has closed its Israel branch, according to Globes.
Refocusing business in accordance with the current situation
Bitmaintech Israel was opened in Raanana in April 2017, reportedly after CEO Jihan Wu visited the country. Its purpose was to develop AI technology for the firm and manage a mining pool called Connect BTC. The branch was headed by Gadi Glikberg, who held the title of VP International Sales and Marketing.
Finance Magnates visited the site in September and received only positive forecasts from Glikberg and the team. For example, Connect BTC was very minor compared to Bitmain’s other mining pools, but the manager told us that the company was planning to dramatically increase its marketing budget in the near future. Moreover, much of the Raanana office space was unoccupied; it was intended to house an expanding workforce.
Glikberg and his 23 employees are now left to seek employment elsewhere. He told them on Monday: “The crypto market has undergone a shake-up in the past few months, which has forced Bitmain to examine its various activities around the globe and to refocus its business in accordance with the current situation.”
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He was referring to the doleful state of the cryptocurrency market at present and the subsequent impact on the business model of cryptocurrency mining companies.
Bitmain and its various mining pools process Bitcoin and Bitcoin Cash, and had been focusing heavily on the latter in the later stages of 2018. At the time of Finance Magnates‘ visit, Bitcoin had a market capitalisation of approximately $109 billion; it currently stands at just over $61 million, according to coinmarketcap.com. Bitcoin Cash, which is harvested using the same hardware, split into two sub-cryptocurrencies in November and promptly lost around 75 percent of its value.
Apart from running mining pools, Bitmain also mines cryptocurrency itself, as well as manufacturing and selling mining equipment. Sales had already been dropping in September, but Glikberg told us that he believed that the market would “find a way”. In fact, documents relating to the upcoming IPO of Bitmain were leaked in August, revealing worrying figures to the public. The company had once valued itself at over $12 billion, but this now seems very optimistic.
In November, a US citizen initiated a class-action lawsuit against Bitmain, claiming that it has formatted its mining machines in an unethical way. Specifically, the complaint alleges that it takes a considerable amount of time to connect a new machine to the account of the owner, during which time it runs on full power and send money back to Bitmain.