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Founder of Bitmain Rival Held by Police Over Possible IP Dispute

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Zuoxing Yang, founder and CEO of Shenzhen-based bitcoin miner maker MicroBT, is being held by local police to assist an investigation, CoinDesk has learned.

The investigation is likely over allegations of intellectual property infringement by the firm related to the technology of its rival Beijing-based crypto mining giant Bitmain, according to one source close to MicroBT with knowledge of the matter. The news was first reported by Chinese crypto news source BlockBeats.

The source confirmed to CoinDesk that Yang was taken away by local police at the end of October – after the unexpected return to Bitmain of of Jihan Wu, co-founder of the firm. Wu seized control of Bitmain last week by ousting the company’s other co-founder and the then-chairman Micree Zhan.

Yang was formerly processor design director at Bitmain, responsible for developing the firm’s flagship AntMiner S7 and S9 models

around 2016. However, he left the company and raised over $20 million to found MicroBT – which produces the WhatsMiner range of mining devices – after discussions with Zhan and Wu for stock options fell through.

Bitmain has already sued Yang and his company in 2017 over alleged infringement of a patent that Bitmain was granted for bitcoin miner-related technology. In 2018, Yang’s legal team successfully appealed to a court in China to have the patent revoked, after which the case was dismissed.

The source said that at this point it’s not clear how and why a police investigation has been opened over possible intellectual property infringement.

MicroBT has recently been posing increased competition to top miner manufacturers such as Bitmain and Canaan, having grown its market share in the bitcoin mining industry.

The firm had not responded to a CoinDesk request for comment at press time. Bitmain did not wish to comment when asked.

Source.coindesk

Bitmain

Bitmain May Soon Cut 50% Of Staff Ahead of Bitcoin Halving

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At a time, Beijing-based cryptocurrency mining company Bitmain was easily the largest Bitcoin-related company, sporting a valuation of (at least) $14 billion in the Chinese private equity markets.

Though, since it secured such valuations in 2018, Bitmain’s business has slowed in a spectacular fashion seemingly due to three reasons:

  1. The price of Bitcoin, despite it recovering since the 2018 bear market, is still much lower than it was two years ago;
  2. Other companies have entered the cryptocurrency market, producing machines that are comparable to Bitmain’s ASICs;
  3. Internal disputes within Bitmain, specifically those between its founders, have likely driven profitability lower.

This slowdown resulted in the company cutting hundreds of positions at the end of 2018, per various reports. Bitmain itself claimed that these layoffs were conducive to the success of its business, adding that they would continue to hire talented individuals to help grow the company.

Despite this, it appears that Bitmain’s prospects are getting harrowing once again, with reports from Chinese media indicating that another purge of its workers may be on the horizon.

The reason: Bitcoin’s impending block reward reduction (better known as the “halving”), slated to take place in May of this year, is expected to affect Bitmain’s business.

Bitmain May Purge 50% of Staff… Again: Chinese Media Report

Per the report, which came from Chinese media company Wushuo Blockchain and was shared on financial information portal Sina Finance, Bitmain at the end of 2019 commenced a “staff optimization plan.”

This news, which came from “several people familiar with the matter,” said that the optimization will affect up to 50% of Bitmain’s current staffers. It currently isn’t clear how many staff Bitmain has, though the report suggested that the Bitcoin firm has “more than 1,000 people.”

As to why this is taking place, the Wushuo report cites the “pressure of the Bitcoin halving,” which will effectively halve the revenue of miners. Also, Bitmain co-founder Jihan Wu was quoted as saying

last year that he is skeptical a cryptocurrency bull run will follow the halving, which would be a first for Bitcoin.

This new of a potential layoff has been corroborated by Dovey Wan, a cryptocurrency venture capitalist best known for her sharing of news regarding China’s Bitcoin and blockchain scene. She wrote on Twitter that “Bitmain is going to further cut half of its personnel by Chinese New Year,” before wittingly adding that this may be the “first

‘halving’ of 2020.”

It is unclear how this seeming layoff will affect Bitmain’s ongoing plans to list some of its shares on public markets in collaboration with Deutsche Bank.

Bitcoin Halving to Be Bullish?

Although Bitmain is planning these cuts in a seeming expectation that the halving will be bearish for Bitcoin, in that the market won’t be able to support new miners — creating a case in which prices crash again, miners stop mining, leading to uncertainty around Bitcoin’s future and, as such, its price — many analysts expect for BTC to outperform before and after the block reward reduction.

Per previous reports from Blockonomi, PlanB’s stock-to-flow model (accurate to a 95% R squared, which relates BTC’s market capitalization to the scarcity of the asset, found that the leading cryptocurrency will have a fair market capitalization of $1 trillion following the 2020 halving. By simple supply-demand economics, this makes sense. If there is a decrease in emission and stable or growing supply, the price of an asset should increase with time.

So should Bitcoin see strong rallies during and around the halving as the analysts expect, Bitmain may be able to weather the storm just fine,

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Bitmain to slash personnel ahead of Bitcoin’s halving

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  • Bitmain gets ready for a stressful event by streamlining its operations.
  • BTC/USD may be less inclined to grow after the halving.
  • Currently, the first cryptocurrency has stuck above $7,000.

One of the world’s largest manufactures of Bitcoin mining equipment launched a personnel optimization program. The heads of all departments are supposed to prepare their optimization lists by the annual meeting on January 17. 

According to the insiders, Bitmain does not have any financial problems at this stage, while a personnel reduction is an attempt to get ready for Bitcoin’s halving scheduled in May 2020.

The reduction of miners’ remuneration will become a hit for the mining industry; thus, the companies should prepare for the stressful event and streamline their operations while focusing on maintaining the leading edge in technology. Therefore, Bitmain

is likely to keep personnel in the mining business and concentrate optimization efforts on AI (artificial intelligence) unit as it does not generate profits. 

Notably, after Jigan Wo regained control over Bitmain, the salaries of all employees have been increased. Also, the CEO announced three strategies aimed at lowering entry barriers for miners and thus stimulating sales of the equipment.

Controversial halving consequences

While many Bitcoin enthusiasts bet on Bitcoin’s price increase due to the halving, the chief of China-based bitcoin mining giant is less optimistic about the much-hoped bull run. In October, he said that the upcoming reduction of bitcoin block reward might not trigger substantial price increase. 

The previous two halvings in 2013 and 2017 resulted in sharp growth that brought Bitcoin to new all-time highs (ATH). However, this time the market conditions are different. Moreover, the cryptocurrency trading industry has become more mature and attracted many players from traditional finances. 

Also, the introduction of derivative instruments loosens the correlation between the price of an asset and its stock to flow ratio. Traders use futures, options and CFDs (contracts for difference) rather than underlying instruments to speculate on price. 

BTC/USD: technical picture

On the intraday chart, BTC/USD has returned inside the Bollinger Band while its lower boundary at $7,070 now serves as initial support that separates us from critical $7,000. Once it is out of the way, the downside is likely to gain traction with the next focus on $6,800 ( the lower line of the daily Bollinger Band).

On the upside, thee initial barrier is created at $7,170. This area includes SMA50 (Simple Moving Average) 1-hour, the middle line of 1-hour Bollinger Band and 61.8% Fibo retracement. We will need to see a sustainable move above this handle for the upside to gain traction and push the price towards $7,500.

BTC/USD 1-hour chart

source: fxstreet

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Former Bitmain Chip Maker in Police Custody for Alleged Embezzlement

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Former Bitmain Technologies chip maker and founder of Bitmain rival MicroBT, Yang Zuoxing, has been reportedly arrested by the Shenzhen police. Yang’s arrest comes amid the ongoing battle between MicroBot and Bitmain, along with the latter’s leadership crisis.

On the other hand, another major bitcoin chip manufacturer, Canaan is also not having the best of times. Following a recent listing on NASDAQ, reports emerged that the company’s stock price value plummeted. The company was earlier listed on NASDAQ.

MicroBT CEO In Police Custody Again

According to a report by BNN Bloomberg on Monday, December 16, 2019, three anonymous sources revealed that Yang has been arrested by law enforcement agents in Shenzhen. In an earlier statement by prosecutors from the Nanshan District in Shenzhen, the MicroBT founder is in police custody on allegations for embezzlement.

However, the statement did not include Yang’s full names, neither did it include the names “Bitmain” or “MicroBT”. The supposed embezzled fund is about $15,000 (100,000 yuan)

After leaving China-based bitcoin mining manufacturing giant in 2016, Yang went on to found a rival bitcoin mining equipment firm, MicrBT. There has been an ongoing battle between MicroBT and Bitmain, with the latter accusing the former of violating patent rights.

Later, the Shenzhen authorities invited the MicroBT CEO for questioning in October 2019. Some sources claimed that the investigation could be related to allegations by Bitmain of an intellectual property infringement by MicroBT.

Notably, Yang’s startup has posed a threat to big industry players like Bitmain, with one of MicroBT’s bitcoin mining rigs, the Whatsminer 20 series, being a best-seller so far in 2019.

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Former Bitmain Technologies chip maker and founder of Bitmain rival MicroBT, Yang Zuoxing, has been reportedly arrested by the Shenzhen police. Yang’s arrest comes amid the ongoing battle between MicroBot and Bitmain, along with the latter’s leadership crisis.

On the other hand, another major bitcoin chip manufacturer, Canaan is also not having the best of times. Following a recent listing on NASDAQ, reports emerged that the company’s stock price value plummeted. The company was earlier listed on NASDAQ.

MicroBT CEO In Police Custody Again

According to a report by BNN Bloomberg on Monday, December 16, 2019, three anonymous sources revealed that Yang has been arrested by law enforcement agents in Shenzhen. In an earlier statement by prosecutors from the Nanshan District in Shenzhen, the MicroBT founder is in police custody on allegations for embezzlement.

However, the statement did not include Yang’s full names, neither did it include the names “Bitmain” or “MicroBT”. The supposed embezzled fund is about $15,000 (100,000 yuan)

After leaving China-based bitcoin mining manufacturing giant in 2016, Yang went on to found a rival bitcoin mining equipment

firm, MicrBT. There has been an ongoing battle between MicroBT and Bitmain, with the latter accusing the former of violating patent rights.

Later, the Shenzhen authorities invited the MicroBT CEO for questioning in October 2019. Some sources claimed that the investigation could be related to allegations by Bitmain of an intellectual property infringement by MicroBT.

Notably, Yang’s startup has posed a threat to big industry players like Bitmain, with one of MicroBT’s bitcoin mining rigs, the Whatsminer 20 series, being a best-seller so far in 2019.

It is not the first time Bitmain is having issues with ex-employees. As reported by Blockonomi back in June 2019, the bitcoin mining manufacturing behemoth sued founders of rival mining pool, Poolin. The founders, who are ex-Bitmain employees, were accused of contravening a non-compete agreement.

As at press time, neither Bitmain nor MicroBT nor the Nanshan district prosecutors have commented on the issue. Furthermore, Some sources familiar with Yang’s arrest revealed that the absence of the MicroBT CEO has adversely affected the company, as the firm is currently unable to make salient decisions such as pricing.

Bitmain Co-founders Still at Loggerheads

In a related development, the leadership tussle within Bitmain is still ongoing with Jihan Wu attempting to strengthen his hold on the company. Wu returned to Bitmain in October 2019 and carried out some organizational restructuring.

As part of the restructuring process, Wu reportedly ejected Micree Zhan, another co-founder out of the company and further forbade everyone from taking orders from Zhan or attending his meetings.

Things got messier following response from Zhan. In an open letter, the co-founder saw the ousting as a betrayal and further threatened to take legal action.

Amid the Bitmain leadership saga, the mining giant is targeting the U.S. market for its IPO, after an unsuccessful attempt with the Hong Kong Stock Exchange. The mining company reportedly applied with the U.S. Securities and Exchange Commission (SEC).

Also, Bitmain in October 2019, launched an enormous crypto mining facility in Rockdale, Texas. The facility is a 50 megawatts (MW) farm on a 33,000-acre site. Furthermore, the mining behemoth is looking to expand the facility to more than 300 MW, which, if carried out, would see Bitmain owning the world’s largest bitcoin mining facility.

Another crypto mining manufacturing giant, Canaan, suffered a major setback recently as the company’s stock price crashed according to market activity data on NASDAQ.

Canaan initially had two failed IPO filings in Hong Kong and China. Later, the mining firm announced a U.S. IPO filing on NASDAQ.

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