Bitmain, one of the largest Bitcoin mining equipment manufacturers, has suspended salary payments to employees for September and potentially longer as the crypto bear market cuts into its revenues.
According to reports citing messages sent to staff, Bitmain has eliminated bonuses and incentives while instituting a 50% base pay cut for workers until at least October 7th.
The message apparently stated that
“The company has yet to achieve a net positive cash flow, especially in the orders of [new] ASICs,” referencing its signature Bitcoin mining rigs.”
Beijing-based Bitmain pioneered and dominates the market for application-specific integrated circuit (ASIC) miners tailored to Bitcoin mining. Its Antminer series has long led the industry in computing power for mining.
In August, North American mining firm Hive announced the purchase of 2,000 of Bitmain’s new S19 XP Antminer rigs in a bullish sign during the downturn.
However, the crypto market slide through 2022 has slashed the profitability of mining. The amount paid to miners to secure the Bitcoin network dropped from $60 million per day in January to under $18 million recently.
This reduced incentive and high energy and infrastructure costs have pressured mining equipment sales. Bitmain’s halt in salary payments suggests sales cannot support payroll expenses.
In similar situations, major exchanges like Coinbase and Gemini have reduced headcount, while others face insolvency.
In better times, just last year, Bitmain’s founders settled an ownership dispute that paved the way for IPO plans and a potential $5 billion valuation.