Bitmain may be the largest manufacturer of cryptocurrency mining equipment in the world but despite the size of the company and its near-total monopoly on the mining industry, it is not immune to the impacts of the 2018 cryptocurrency bear market.
Bitmain has been forced to close down its Israeli development center, amid rapidly declining revenues. Possibly over 1 million Antminers have been shut off since the beginning of November 2018.
The mining industry has entered its worst bear market in history. For years, Bitcoin’s hash rate had been exponentially increasing, but now it has declined from 60 EH/s to 35 EH/s. This represents billions of US dollars of Bitcoin mining equipment being shut off, the equivalent of 1.3 million S9 Antminers according to BitMEX Research. Total daily Bitcoin mining revenue has fallen from USD 12 million to USD 6 million per day, leaving only about a USD 1 million daily profit margin across the entire Bitcoin mining industry, even after the mass shutdown of mining rigs.
Bitcoin mining manufacturers are in a situation they have never experienced before, where the rigs they sell are rapidly becoming worthless. This is causing demand to dry up and possibly leaving Bitmain with excess inventory it cannot sell. The shutdown of Bitmain’s Israeli development center and subsequent layoff of the 23 employees that worked there are signs that Bitmain has switched from global expansion mode to contraction. The Israeli development center was a critical hub for the creation of new blockchain and AI technology.
Bitmain was trying to go public on the Hong Kong stock exchange via an IPO, which is supposed to occur by Q1 2019 at the latest. However, the company is in a particularly bad position its major budget problems may postpone the IPO. Not only is Bitmain seeing drying up sales and being forced to close their critical development centers, it is heavily invested in Bitcoin Cash, which has fallen more than 80% in a month due to the Bitcoin Cash fork. Essentially, the firm put its entire war chest into Bitcoin Cash and now that money is mostly gone. Also, Bitmain is being sued for their role in manipulating hash rate during the Bitcoin Cash fork.
A silver lining to all of this is the Bitmain monopoly may finally be breaking, which will allow other mining manufacturers to become competitive. This would be a good thing for cryptocurrency miners worldwide since increased competition generally brings better technology and lower prices.
Follow BitcoinNews.com on Twitter: @bitcoinnewscom
Telegram Alerts from BitcoinNews.com: https://t.me/bconews
Want to advertise or get published on BitcoinNews.com? – View our Media Kit PDF here.
Image Courtesy: pixabay
