Report: Layoffs at Cryptomining Giant Bitmain as Company Anticipates Possible Revenue Squeeze from Upcoming Bitcoin “Halving”

Bitmain, one of the world’s largest manufacturers of cryptocurrency mining hardware, says it is reducing staff in order to head off a revenue squeeze that could occur when Bitcoin “halves” in May, Sina reports.

Although, “the company is now operating normally and the cash flow is healthy,” Sina writes, Bitmain…launched a staff optimization plan at the end of 2019.”

The outlet says Bitmain regards itself as comparatively overstaffed:

“Compared with the rival Shenma Mining Machine with a size of 100 people, Bitmain has more than 1,000 people and the number of personnel is relatively redundant.”

Bitcoin’s forthcoming halving will also reduce by half the number of coins released by the software when a block of transaction data is sealed.

Currently, the “block reward” for settling a block of data on bitcoin is 12.5 bitcoins. In May, the reward gear dow to 6.25 bitcoins.

Bitcoin, was established in opposition to central banks’ perceived incontinence. Bitcoin’s automated model for coin issuance is accordingly “deflationary,” with half as many coins issued every four years.

Bitcoin advocates and lifestyles believe the halvings make “the coin” more scarce and therefore more valuable. Bitcoins are code-based and highly divisible, however, in which case “scarcity” seems to be partly a matter of perception.

The halving definitely does decrease obvious mining revenues and could imply an impending increase in fees.

Fee increases could effect the competitiveness of the network. Many other “public blockchains” have come online since Bitcoin was released in 2009, including Ethereum, EOS, Tezos and Tron.

All the computers in the Bitcoin network (it is hard to say how many there are, but there may be millions) compete for the block reward every time a block of transaction data accumulates. The “guessing game” engaged to command the block reward is energy-consumptive and expensive.

Bitcoin mining costs are already high and may come close to the coin’s current retail price of about $8000 in 2020, according to “digital asset manager” Charles Edwards.

Last fall, Bitmain ousted its co-founder Micree Zhan, who, by all accounts had been trying to move Bitmain off its singular focus on cryptocurrency mining and onto AI (artificial intelligence).

Zhan protested the layoffs on Weibo, Sina’s Twitter-like microblogging site.

He called the layoffs “ridiculous” given that, “Bitmain’s cash flow is healthy, and there are huge amounts of virtual currency assets.”

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