Digital currencies

China’s Bitmain Technology and Huobi plan layoffs as cryptocurrency crunch begins to bite

  • Planned lay-offs come amid a bear market in cryptocurrencies, with 70 per cent knocked off bitcoin’s value in 2018
PUBLISHED : Wednesday, 26 December, 2018, 1:18pm
UPDATED : Thursday, 27 December, 2018, 11:57am

Two of the world’s biggest cryptocurrency companies have confirmed lay-off plans amid an industry crunch that has seen US$170 billion wiped off bitcoin’s market value this year.

Beijing-based Bitmain Technology, the world’s biggest maker of cryptocurrency mining rigs, said in a statement that the company is undergoing “some adjustment to our staff this year” as it continues to build a sustainable business, following reports on Chinese social media that it was planning job cuts.

“A part of that is having to really focus on things that are core to that mission and not things that are auxiliary. As we move into the new year we will continue to double down on hiring the best talent from a diverse range of backgrounds,” said Bitmain in the statement.

A Bitmain spokesman on Wednesday denied rumours on Chinese social media that the company will sack more than half of its employees, but declined to specify exactly how many lay-offs are planned.

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Meanwhile, a spokeswoman for Huobi Group, operator of one of the world’s biggest cryptocurrency exchanges, said on Wednesday that the company is “optimising staffing” by cutting its worst-performing employees. But she added that the Beijing-based firm is still hiring people for its core businesses and emerging markets.

The planned lay-offs come amid a prolonged bear market in cryptocurrencies. This year bitcoin, the world’s biggest form of digital money, has fallen more than 70 per cent in value. In total, nearly US$500 billion has been wiped off the value of the more than 2,000 cryptocurrencies available in the market.

Both companies declined to quantify the number of job losses planned. By the end of June, Bitmain had a total of 2,594 full-time employees including some 840 engineers, according to a company filing to the Hong Kong stock exchange. Huobi has more than 1,000 employees.

Earlier this month Bitmain closed its research center in Israel, which had over 20 staffers.

The actions by Bitmain and Huobi follow similar moves by other industry players such as blockchain-based social network Steemit as well as ConsenSys, a software production studio, which is letting go of 13 per cent of its 1,000-strong staff globally.

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A Beijing-based Bitmain employee, who asked not to be identified because the information is not public, said the lay-offs will be spread across most of Bitmain’s divisions, but the person was not aware of the exact number of planned job losses.

Chinese companies Bitmain, Canaan, and Ebang – the world’s top three suppliers of computers used to create new units of digital money – have all proposed initial public offerings in Hong Kong this year. The city’s market regulator and stock exchange operator, however, are reluctant to approve IPOs for any cryptocurrency-related businesses citing the lack of regulations in the industry, according to an earlier news story citing people familiar with the situation.

Canaan has let its IPO application lapse. Last week Ebang refiled its application with updated financial information stating that it has seen “significant decreases” in revenue and gross profit in the third quarter.

“Downsizing is a natural cycle in new, rapid growth industries, and unfortunately blockchain is no exception,” said Jehan Chu, co-founder of Hong Kong-based blockchain investment firm Kenetic Capital, who declined to comment on his company’s hiring plans.

“We saw this with the internet in the early 2000s, but that period also gave rise to the largest companies in the space today. I look forward to a sharper, more focused version 2.0 of the blockchain industry,” he said.