Bitmain, the Beijing-based producer of Bitcoin mining machines is cutting its workforce, according to local reports. This comes just five months ahead of Bitcoin’s “halvening,” expected to occur in mid-May.
The halvening will cut mining rewards in half, harming the profits of miners, who will initially have to work twice as hard for the same rewards. The halvening is likely to punish the least profitable mining outfits the most—most likely those running old miners, or who are paying the highest electricity bills.
Still, the halvening has historically boosted Bitcoin’s price, and if that happens again, it could alleviate some of the costs. Similarly, transaction fees might rise in order to offset the loss of mining rewards.
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The forced redundancy will also correct Bitmain’s mismanagement. According to Wushuo Blockchain, Bitmain hires over a thousand people; more than ten times the workforce of its rival, Shenma Mining Machine.
Bitmain’s co-founder, Jihan Wu, ousted his co-founder, Micree Zhand, in October, and has since made moves to reorganize the company. Bitmain insiders, according to Wushuo Blockchain, said the cull will correct Zhand’s haphazard approach to business strategy and poor allocation of funds.
Wushuo Blockchain said that Wu asked heads of departments to provide a list of who to cut from its ranks. The final list will be completed before Bitmain’s annual meeting, which will be held on January 17.
Bitmain also laid off a large proportion of its workforce in 2018. Some reports said up to 50 percent of its staff were cut last year; some departments, such as Bitmain’s Israel outfit, were closed entirely.