The news of Bitmain's large-scale layoffs is still fermenting. In this wave of layoffs, the mining business that once contributed $220 million in annual revenue to Bitmain was not spared.

A person in the mining industry exclusively revealed to Odaily that Bitmain has planned to cut off all mining operations, "Leaving a maximum of 10 people to do some asset-light operations."

This also means that more than 500 employees in the mine maintenance and operation business line will be fired, and Bitmain has also entrusted relevant dealers to sell the second-hand Antminer S9 in its own mine.

In addition, Jialin, a mining machine dealer, told Odaily: “Bitmain is dismantling the mining machines in stock and selling accessories.”

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From "massive mining" to abolishing mines

A few days ago, a sales executive close to Bitmain revealed to Odaily that Bitmain has entrusted Honeycomb Mining Machine and Fengteng Mining to sell second-hand Antminer S9 mining machines. These mining machines are all sent from Bitmain’s mines. Comes with a 6 month warranty."

At present, the 14T and 14.5T Antminer S9 have been sold out, and the mining machines below 14T have not been cleared.

However, in the month before the big cleanup, Bitmain sent people to various parts of the country to find high-quality power resources.

In mid-November, just as BCH was forking, a mining person also encountered a person from Bitmain looking for electricity at a local power plant in Sichuan. But in the end, because "they (Bitmain) are not familiar with the way to get electricity", they stopped.

According to the prospectus submitted by Bitmain to the Hong Kong Stock Exchange in September, Bitmain was building multiple mines in the United States, Canada and other places at that time. Three of them are expected to start operation in the first quarter of 2019.

According to a report by Bitcoin Exchange Guide in November, a mining farm built by Bitmain in Washington, after being equipped with more than 8,000 S9 mining machines, the entire facility cost $20 million.

But now, these soon-to-be mines may have to change hands.

Along with the closure of the business line is the large layoff of the department.

According to Bitmain’s prospectus, as of mid-2018, Bitmain had nearly 2,600 full-time employees. Among them, there are more than 500 personnel for mine maintenance and operation, accounting for 20% of the total number of employees in the company.

Now, most of them are about to leave.

People familiar with the matter pointed out that Bitmain’s layoffs have not yet ended. It is now estimated that more than 100 people will be laid off a day. In the end, only 300 to 500 people will be left in the entire Bitmain.

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Urgent need to digest mining machine inventory

It has become an industry consensus that the mining industry is short of money.

An industry insider told Odaily that Bitmain invested in a company not long ago, "actually it is joint mining. The invested company provides electricity and mines, and Bitmain provides mining machines. The requirement for cooperation is that the invested company can advance the electricity bill in advance. , in order to reduce Bitmain’s capital investment.”

After a mine owner in Beijing heard about Bitmain's demand, he immediately had the idea of ​​cooperation. "Bitmain has a large volume, and we are willing to offer quite favorable conditions to seek cooperation."

Odaily learned from a number of industry insiders that in addition to continuing to mine in this cooperative way, Bitmain is currently digesting the mining machines in stock and withdrawing funds to "overwinter".

In addition to mining, Jialin, a mining machine distributor in Huaqiangbei, also heard that Bitmain was dismantling the inventory of mining machines and selling accessories when he was running the factory.

According to an analysis by a person familiar with the matter, Bitmain is relatively pessimistic about the medium-term trend. They judge that the market will not be good for a long time, and the mining machines in stock cannot be sold at a good price in the short term, so they want to sell all the heavy assets from the mine cleaning machine to the mine withdrawal, and travel lightly.

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Crisis or due to poor management and strategic mistakes

Although Bitmain's performance was exceptionally bright when it submitted its prospectus in September, the "giant ship" is now in crisis.

Bitmain’s prospectus disclosed that the company’s net profit in the first half of 2018 was US$743 million, a year-on-year increase of 794.8%. At the same time, research and development expenses in the first half of this year cost a total of nearly 87 million US dollars.

However, according to information obtained by Odaily from various parties, Bitmain spent much more than that on the research and development of 12nm and 7nm chips in the first half of this year.

"Bitmain failed several times in 'streaming' and lost 700 million US dollars." A mining machine practitioner told Odaily.

According to him, the reason for such a mistake was first of all a technical problem of the team. In the two years after the Antminer S9, Bitmain has not launched a new model. In order to maintain its dominant position in mining machines, Bitmain began to invest in research and development of new machines after revenue of 2.5 billion U.S. dollars in 2017.

One will succeed and all will die. On November 8, Bitmain finally launched the S15 and T15 mining machines equipped with 7nm chips.

However, it didn't take long for the currency market to start hitting rock bottom. It is difficult for these two high-priced replacement models to open up the market.

"Manufacturers who develop advanced equipment will suffer in a bear market. In a bull market, mining machines with low power consumption ratio are naturally the first choice of miners, but in a bear market lacking effective cash flow, only old mining machines with sufficiently low production costs can be used. There is a market." A senior mining industry commented.

In addition, Bitmain did not reverse the situation in the BCH fork strategy.

In May of this year, IDG Capital’s internal report on Bitmain wrote: “The (Bitmain) company and management have held more than $2.5 billion in BCH and are continuing to buy.”

But now, compared to May, BCH has shrunk by 86.5%.

In terms of performance, Bitmain’s ranking in the chip field is also declining. In the 2017 list of Xinmou Research, Bitmain has become the second largest chip design company in China because of its sudden emergence in ASIC hardware. But this year's performance knocked it down to fourth place.

Some people in the industry attribute the problems of Bitmain to poor management. Bitmain's management model has always adopted a dual-CEO model. It is generally said in the industry that Wu Jihan is in charge of the market and operations, Zhan Ketuan is in charge of technology research and development, and the two co-CEOs "combine two swords". However, industry insiders close to Bitmain pointed out that Bitmain’s top executives are not good at project management.

Odaily in "Ketuan Zhan and Jihan Wu may step down as CEO of Bitmain at the same timeThe article quoted relevant sources, and Zhan Ketuan expressed doubts about his management ability.

The bear market is still going on. For the current situation of Bitmain, Zhang Wencheng, vice president of Shenma Mining Machinery, believes that don’t take chances. The bear market may drag on for a long time. If the cost for them to obtain Bitcoin is already high, then You should deal with assets decisively and integrate your own resources to survive.

(Authors Xue Jiao and Wu Yan focus on mining and blockchain reports, you can add WeChat hxjiapg and BIG-BYE for communication, please note your position and reason)

(Authors Xue Jiao and Wu Yan focus on mining and blockchain reports, you can add WeChat hxjiapg and BIG-BYE for communication, please note your position and reason)