Bitmain Might Soon See a Class Action Lawsuit!

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Bitmain, a cryptocurrency mining giant, might see a class action lawsuit sometime real soon. About a year ago, they held an official IPO and raised around $700 million from investors. Now it looks like those $700 million got them out of bankruptcy. Also, a couple of days ago their application for an IPO on the Hong Kong Stock Exchange expired, meaning that no time soon we will see Bitmain trading on the HKEX. 

Class action works in Honk Kong says unofficial sources

During the summer of 2018, Bitmain along with its CEO Jihan Wu, promised to their investors that the valuation of the company will grow from $12 billion to $18 billion. Bitmain justified this increase with the statistics of their previous quarters, showing that they have constantly grown. Respectively, in the first half of 2018, they profited nearly $1 billion after having made over $1 billion for all of 2017. After that, in the third quarter of 2018, Bitmain reported a loss of $500 million.

According to this, a Twitter user BTCKING555, who has been actively involved in criticizing the Bitmain IPO from the beginning, wrote that a group of investors are preparing a class action lawsuit against Bitmain. Their expectations are shattered since they were expecting a more significant growth by the company by this time.

The influence of the market, impatient investors or business management issues?

Of course, you can go on and say, “but the market hasn’t been much of a treat either”! It’s true and that could be accounted as one of the flaws of Bitmain – it just wasn’t there at the right time. However, a company of such scale like Bitmain should’ve at least warned their investors of a possible bear market period. They should’ve made a proper road map with multiple scenarios on how the market situation can escalate. No wonder HKEX didn’t list them immediately. Happened exactly what HKEX anticipated – crypto markets were too volatile. But with a valuation of $12 billion the company could’ve predicted where the markets were heading.

Also, you can say that the investors should’ve done more in-depth research of the company before actually investing. Overall, this situation sounds a little bit ridiculous from all parties point of views. The investors complain that the company hasn’t reached all-time highs, the company is barely hanging on, even though their massive profits earlier and the market is continuing to go down. I already can imagine the Bitmain officials thinking to themselves: “Just please wait one more year, and you will see your profits”, but unfortunately you cannot tell the market what to do.

On the other side, we could possibly see a bull market in the near future. That could turn the Bitmain issue around since Bitmain’s profits are closely tied with the ecosystem and price of Bitcoin.

Source:

https://cointelegraph.com/news/bitmain-investors-could-file-a-class-action-lawsuit-against-company-says-critic
https://www.coindesk.com/crypto-mining-giant-bitmains-ipo-application-has-officially-expired

Photo by Ben Rosett on Unsplash

Bitmain again having lay-off issues

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Recently there have been numerous rumors saying that Bitmain is about to lay-off almost 50-85% of their staff, because of the crypto market downfall issues. Bitmain is a mining equipment company which has suffered a massive drop in the interest of their mining business as a whole. 

Rumors out of a Chinese LinkedIn with very “high accuracy”

All these rumors are backed by a mysterious Chinese-like LinkedIn called Maimai, where some of Bitmain’s employees have created a long thread about a significant layoff planned by Bitmain. In the thread, they were discussing the possible salaries and bonuses they would get. Some comments speculate on the number of job positions being let off, but all-in-all, it’s just a social media site.

These could be just pissed-off employees spreading lies about the company.

An official who wants to stay anonymous

Later, the South China Morning Post stated that both, Huobi and Bitmain, has confirmed the layoffs, but the Bitmain official wanted to stay anonymous because this news still hasn’t been revealed to the public. He denied that Bitmain was about to lay off 50% of their staff, but also didn’t specify anything in particular.

Bitmain closes Israel development arm

Earlier this month, Bitmain laid off all their 23 employees in their Israel department. This department was mainly for research purposes. Only a few months earlier, they were about to hire 40 new researchers. The branch leader, vice president of Bitmain, who also got laid off, stated: “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.”

Has Bitcoin Cash anything to do with this?

It was previously reported that Bitmain sold almost all their Bitcoin for Bitcoin Cash. Also, Bitmain is one of the, if not the biggest, supporter of Bitcoin Cash with Jihan Wu in the front. Believably, Bitmain holds somewhere from 664,000 – 1,33 million BCH coins. Earlier this year, during March, Bitmain had about 22k BTC, but during December 2016, they had about 71k BTC. That indicates that they are either covering their expenses with BTC or selling it for BCH. Who knows how much they have left.

Revenue, profits, and IPO.

These are abnormal figures we’re talking about. For more, last year they recorded a stunning $2 billion in revenue, with $1,22 billion of it being profit. And this is only counting their primary business – mining equipment. God only knows how much other coins have they mined and stored. However, they decided to do an official IPO and managed to raise $400 million with an objective to raise $1 billion before beginning their efforts in securing their IPO. In September they filed for officially going public. That poses a simple question – why do you need more money, when you have almost all of it?

Bitcoin Cash or Bitmain

It looks like Jihan Wu is in an unbearable situation. Mining business is falling, and so is Bitcoin Cash‘s price. Jihan is entirely behind BCH in this recent hash war with Bitcoin SV. Much like dumping his employees, after a while and a few billion, he could stop supporting BCH as well. That would mean a complete loss of hash rate, and possibly the end of this cryptocurrency.

Also, there were rumors from Samson Mow that Bitmain is shutting down their Bitcoin Cash development team Copernicus which was responsible for the Bitcoin Cash GO client.

This bear market is severely damaging the crypto ecosystem, as most of the companies which felt stable last year, or at the beginning of this year, now feel endangered and clueless about their future. Though one thing is not clear – how can you earn so much money (Bitmain) and still ask for more? People are still waiting for Bitmain’s next revenue reports. 

Source:

https://goo.gl/kczcPm
https://goo.gl/Rwgcz9
https://goo.gl/ZPT6au
https://goo.gl/wDDqMv
https://goo.gl/SghrUL
https://goo.gl/Qagb56

Bitcoin mining difficulty drops 15%

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Recently on December 3, Bitcoin mining difficulty has seen a severe drop which is the second biggest in its history of existence. Judging by the statistics of BTC.com, Bitcoin experienced a -15,13% drop in difficulty on block height 552,384. 

It is normal for Bitcoin’s difficulty algorithm to be adjusted every two weeks, to maintain the 10 minute block time. The previous adjustment was made on 17th of November when the Bitcoin difficulty dropped -7,39%.

Source: btc.com

Crypto winter

This and the previous Bitcoin difficulty adjustment marks the beginning of the so-called “crypto winter”. There are multiple reasons why this has happened. First and foremost – the big market decline which Bitcoin experienced during mid-November when it entered an even bigger bear market losing around -40% in value. Then there is the previous hash rate clash between Bitcoin Cash and Bitcoin SV, after which Bitcoin Cash difficulty dropped to new lows since the beginning of 2018. Also, last but not least, the “terrible conditions” that global markets are in, reports CoinTelegraph.

History of difficulty drops

There have been significant Bitcoin difficulty adjustments in the past, but the latest counts as the second largest drop in Bitcoin’s history. November 1 2011, Bitcoin saw the single biggest decline in mining difficulty. It dropped -18%. What happened in 2011 at this time? Bitcoin had dropped almost 90% from its first ATH $28.92 to $3.15. And then it slowly came back and booked its next ATH $230 in 2 years time. Can we expect something similar? 

Mining gear sold by weight

During late November, when Bitcoin price had fallen below $4.500, Chinese miners started selling the old mining machines by weight. This marked yet another price decline, as it planted some disbelief among investors. CoinTelegraph reports that Chinese miners were getting rid of the older models such as Antminer S7, Antminer T9, and Avalon A741. These models were not making any profit as they have reached their “shutdown price”. Videos of vast piles of miners dropped outside on the street were storming the internet. 

We believe this is only temporary as new mining gear will come out which will be more powerful than the previous one. But this raises a question. If we look, for example, at Bitmain. Let’s say Bitmain holds A LOT of S9 miners. Bitmain also carries a lot of mining power and basically has a monopoly in mining Bitcoin. Aren’t they interested in developing the technology in order to profit more and mine more, respectively?

Or on the other hand – could it be that Bitmain and similar large companies are artificially holding back the development of mining technology? So that they don’t have to purchase new gear and throw out the old ones? But how long can someone hold back the development of technology?

Markets today

Following yesterday, today the price is continuing to decline. Bitcoin alone has lost near to 5% today, and other cryptocurrencies are following. Today’s top100 loser is Mithrill, which was pumping yesterday with +15%. Today we see it declining the same -15%.

Source: coin360.io

The statistics website coin360.io lately looks like they only have one color left – red. However, that is all good, that was predicted and is nothing to be frustrated about. Still, we can see Bitcoin worth $2000 or even lower. Only when we will see countless days of continuous price increase then we can start yelling phrases like “bull-run emerging!” and similar.

Source:

https://goo.gl/ir7nku
https://goo.gl/4Kjj9P
https://goo.gl/pyYZzv
https://goo.gl/FX1TCP
https://coin360.io

Photo by Frans Van Heerden from Pexels

EXCLUSIVE! Roger Ver on the upcoming Bitcoin Cash fork!

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Recently we did an article on the upcoming BCH fork, which is due to happen on 15th November. Since the event has a lot of uncertainty revolving around it, we decided to contact the head of Bitcoin Cash – Roger Ver, to ask him a few questions. 

Bitcoin Unlimited

We asked Roger about the third proposal by Bitcoin Unlimited, called BUIP908, which anticipates combining both – BitcoinABC (BABC) and BitcoinSV (BSV) proposals. We wanted to know why that is a third option, and whether Bitcoin Cash with Roger Ver would approve the outcome of that scenario. To which Roger replied very shortly, that Bitcoin.com is a very big fan of Bitcoin Unlimited (BU). “We have been running their software long before Bitcoin Cash was created,” he said replying to our e-mail.

This answer kind of leads to thinking that Bitcoin Cash along with Roger would approve the outcome of the third proposal by BU. However, this thought complicates the whole situation even more. That makes us think that Roger doesn’t want to work with Craig S. Wright anymore. He would much rather shake hands with BU than BSV. We wouldn’t either after receiving such an e-mail.

Smart Contracts

Next, we wanted to know what were the significant changes the BCH users are going to witness if Bitcoin ABC proposal goes through. To which Roger Ver (also, very shortly) answered that it’s the new ability to make smart contracts using Oracles. An oracle is a data feed – provided by third-party service – designed for use in smart contracts on the blockchain. This “seems like a major new use case thanks to opcode DSV,” explained Roger Ver.

Miner support

So of course, we had to ask the classic question – what would be the worst case scenario for this hard fork? Roger replied very purely to this question, saying that:

“The entire thing breaking and everything going to zero is always the worst case scenario.”

That seems to be a very general answer as you could apply that to any cryptocurrency in the game. However, this is very concerning as many talks revolve around the lack of miner support for either BitcoinSV and BitcoinUnlimited.

The fact is that currently if we’re judging by the statistics of CoinDance, Bitcoin SV holds 57,1% of the Bitcoin Cash hash rate. Which is surprisingly down by 18,6% since yesterday November 12, referring to a tweet by @WhalePanda. That is a tremendous decline in just a day! Makes you think how much more can it drop before the hard fork? That means that miners are moving from BSV supported mining pools and switching to different ones. For example, yesterday in WhalePanda’s tweet Coingeek had 32.64% of hash rate, but today it only has 23,7%. That is a very significant amount of miners fleeing their mining pool. Also, the percentage of “other mining pools” have increased by almost five percent. Yesterday it was 2,78%, and today it has risen to 7%. Could this mean that miners are coming to a consensus on which chain they are willing to mine?

This BCH fork has generated much attention as it is exciting to see how it is going to escalate with so many possible outcomes.

For more information Roger Ver referred to his recent video, he did on Youtube, reading the Craig S. Wright e-mail and talking about the upcoming fork.

Thanks to Roger Ver for finding time for our questions, even though this didn’t clarify something we already knew, but led to more speculation on the possible outcome. 

Source:

https://goo.gl/uCHxqy
https://goo.gl/27zok4
https://goo.gl/sr75ug
https://goo.gl/E4BrSs

Photo taken from Wikimedia Commons

Bitmain filed for an IPO in Hong Kong.

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On Wednesday, the worlds largest cryptocurrency mining manufacturer Bitmain, filed for an IPO to list in Hong Kong. 

In the past year, Bitmain has seen remarkable growth mostly because of the whole crypto market booming at that time. Crypto mining was popular and the equipment cost a lot. And it shows up in the numbers provided by Bitmain as well. In the past year Bitmains’ profits were around $1,4 billion and the whole revenue was around $5.1 billion, which most likely all came from selling mining rigs for cryptocurrency.

Now when the markets are plummeting, the picture does not look that great at all. Mining is becoming a luxury only for wealthy enough individuals and the new mining hardware is outperforming the previous ones. It is rumored that Bitmain still has $900 million worth of unsold mining gear in June, which at the moment, if held any longer, could become useless. At the moment, AntminerS9-Hydro is sold for $719.

If not speaking about all the FUD that Bitmain has received because of purchasing 1 million Bitcoin Cash (BCH) coins for Bitcoin (BTC), but if we rather look at the situation as a whole – Bitmains’ next years profits aren’t looking that bright anymore. Because the company is mostly dependent on the crypto market prices. Specifically Bitcoin price, because Bitcoin kind of sets the mood for the whole market. So if the market keeps plummeting, then cryptocurrency mining slows down as well. Bitmains’ revenue decreases as well, because they hold their profits in cryptocurrencies. And if this keeps going on for a while, Bitmain might be on the path of closing their business.

As mentioned above, Bitmains’ business model is mostly dependent on cryptocurrency market prices. But if we see a completely different scenario, and the market turns 180 degrees, and starts rocketing towards new all time highs – then the Bitmain business will see its second breath of a new life.

So if asked whether to invest in this IPO, the answer would be rather no than yes, because this year has been hard for crypto markets, and the near future doesn’t look like is going to change fast, because there are major regulations and ETF approvals to come which both could change the pace of crypto markets.

At the same time – Bitmain hasn’t specified anything on their upcoming IPO, neither the price nor on how much they are planning on raising.

Source:

https://goo.gl/uTp8T2

Photo by Canva.com

Bitmains’ IPO and BCH (Bitcoin Cash) scandal

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Recently Bitmain, the worlds cryptocurrency mining giant, announced that they will be having an IPO (Initial Public Offering). This could be the worlds biggest IPO seen this far, since it is rumored to to hold around of $14 billion.

That’s all nice and dandy, but there are some hidden gems in this story. First, the CSO of Blockstream, Samson Mow tweeted an image of what appeared to be a leaked version of the Bitmain investors deck. It revealed that Bitmain had sold around 70% of their bitcoin holdings into alomst 1 million BCH coins. He writes:

“According to the Bitmain pre-IPO investor deck, they sold most of their #Bitcoin for #Bcash. At $900/BCH, they’ve bled half a billion in the last 3 months. If Bitcoin Core devs didn’t disclose the Bcash vulnerability, it could’ve wiped a billion dollars off their balance sheets.”

Next he highlighted that Bitmain had published only the Q1 numbers and claimed that Bitmain might be hiding the Q2 results, because they are a disaster.

“Why is Bitmain raising capital so fast & only showing Q1 results to pre-IPO investors? We’re well into Q3 now. The reason is Q2 was a disaster. Bitmain is sitting on a massive $1.24 billion USD in inventory & S9 prices dropped by ~85%! Q2 losses range in the $600-700 millions”, he writes in his tweet.

So why Bitmain sold almost all of its Bitcoin holdings? Some are speculating that it was done to pump the price of BCH. Another claim is that they were afraid of the Bitcoins’ Lightning Network which would decrease the miners profits, which resulted in the BCH fork. They also were behind the Bitcoin 2X fork, which failed.

As Vijay Boyapati (@real_vijay) writes in his twitter thread – “The creation of BCash was based on the fear that if Bitcoin were to scale using second layer technologies (such as Lightning Network), Bitmain’s profits through mining fees might dwindle”, adding that “Bitmain is sitting on paper losses of hundreds of millions of dollars from this botched trade. But even worse, they have no ability to exit their billion dollar position in BCash without a complete collapse in its price.”

All this sounds very cheeky to me, because the company (Bitmain) is obviously trying to save their unsuccessful trade positions. Which is understandable, from a mining monopoly point of view. Bitmain nearly holds 51% of total Bitcoin hashrate and mining services and products are their main business field.

But the thing that frustrates me the most about this issue is that Bitmain could be behind the massive propaganda movement what is going on between BCH supporters since I can remember it – Bitcoin Cash is the real Bitcoin. Now it makes more sense from the Bitmain point of view. And if it is true, then Bitmain is executing a really aggressive marketing strategy which affects the newcomers in the crypto-industry by spreading lies to the community. But the worst thing might be that with this action they are putting two crypto communities against each other. And all that is done because of greed.

I hope that none of this is true and just a bad speculation of coincidences, because this could affect the crypto-industry in a really bad way.

Source:

https://goo.gl/DBFHyS
https://goo.gl/UfJ1tF
https://goo.gl/BafEKn
https://goo.gl/zTq1RQ
https://goo.gl/yJXu3Z
https://goo.gl/HaH3sT