Key Points:
- Bitmain suspends salary payments and slashes base pay by 50% due to crypto market struggles.
- The decline in mining profitability and reduced miner rewards put pressure on Bitmain’s sales.
- Other major crypto firms have faced similar challenges, with some resorting to workforce reductions.
Bitmain, a prominent manufacturer of Bitcoin mining equipment, has decided to suspend salary payments to its workforce for the month of September, with the possibility of extending this measure due to the adverse impact of the cryptocurrency bear market on its earnings.
Reports citing internal communications with employees reveal that Bitmain has chosen to eliminate bonuses and incentives, implementing a temporary 50% reduction in base pay for its staff, at least until October 7th.
The communication reportedly mentioned that:
The company is still striving to attain a net positive cash flow, particularly concerning orders for its signature Bitcoin mining rigs, known as ASICs.
Bitmain, headquartered in Beijing, holds a dominant position in the market for application-specific integrated circuit (ASIC) miners designed specifically for Bitcoin mining. Its Antminer series has consistently set industry standards for mining computing power.
In a positive turn of events, North American mining company Hive recently made a substantial purchase of 2,000 of Bitmain’s new S19 XP Antminer rigs, signaling confidence during the ongoing market downturn.
However, the decline in the cryptocurrency market throughout 2022 has significantly impacted mining profitability. The rewards given to miners for securing the Bitcoin network have plummeted from $60 million per day in January to less than $18 million in recent times.
This decreased incentive, combined with high energy and infrastructure costs, has placed substantial pressure on mining equipment sales. Bitmain’s decision to suspend salary payments reflects the challenges in maintaining payroll expenses with dwindling sales.
In similar circumstances, major cryptocurrency exchanges such as Coinbase and Gemini have resorted to workforce reductions, while others have faced financial instability.
Just a year ago, in more prosperous times, Bitmain’s founders resolved an ownership dispute, setting the stage for potential IPO plans and a prospective valuation of up to $5 billion.
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