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Bitmain Faces Salary Payment Suspension

source-logo  financemagnates.com 10 October 2023 08:03, UTC

Bitmain, a manufacturer of Bitcoin application-specific integrated circuits (ASICs), has temporarily suspended employee salary payments for September and beyond. The move comes as the company faces financial difficulties. This includes a lack of positive cash flow for September and a decline in orders for new ASICs.

Internal Message from Bitmain: The Reasons Behind September Salary Pause

Multiple Bitmain employees disclosed these developments anonymously. They stated that the firm has cut all "bonuses and incentives" for its staff. It also imposed a 50% reduction in their base salaries. In an internal message allegedly from Bitmain, it stated:

"For the month of September, the company has yet to achieve a net positive cash flow, especially in the orders of [new] ASICs. The Executive Management Team therefore decided that salaries for the month of September will be paused, to be reviewed after October 7 after the holiday."

Volatility in Crypto and Mining: Challenges Faced by Bitmain

Founded in Beijing in 2013, Bitmain has been one of the major players in the Bitcoin mining industry. During its peak, it held an estimated 70% market share in the Bitcoin mining ASIC manufacturing sector. Bitmain's Antminer ASIC series has been a leader in terms of hash rate computations for Bitcoin mining.

The situation at Bitmain has raised concerns among its employees and stakeholders as the company navigates financial challenges.

Bitcoin miner Hive recently announced its acquisition of 2,000 Bitmain S19 XP ASIC miners for immediate deployment in its mining rigs. These miners, listed at a price of $4,653 on Bitmain, are expected to contribute significantly to Hive's mining operations, generating an estimated $80 per megawatt hour in revenue.

Bitmain, once led by co-founder Jihan Wu, settled a year-long ownership dispute in 2021 with co-founder Micree Zhan. As part of the agreement, Wu resigned as chairman and CEO of Bitmain. He sold his ownership stake to Zhan for $600 million.

Bitmain had initially planned for an initial public offering (IPO) with a valuation of $5 billion by late 2022. However, these plans appear to have been shelved due to the ongoing bear market in the cryptocurrency industry.

The pause in employee salary payments and financial challenges at Bitmain highlight the volatile nature of the cryptocurrency and mining industries. The market conditions can significantly influence industry players. Bitmain's future prospects will likely depend on its ability to navigate these challenges successfully.