Due to financial difficulties and sluggish progress in its mining operations, Bitmain, a significant participant in the Bitcoin mining sector, has taken the step of suspending employee pay.
As per information from insiders within the company, this suspension encompasses both performance-based and regular wages, affecting all Bitmain employees. This drastic measure mirrors the company’s previous challenges, despite having once dominated more than 70% of the worldwide Bitcoin mining machine market share.
Bitmain’s financial woes are not a recent development. The company has endured significant challenges stemming from internal conflicts between its co-founders, Wu Jihan and Zhan Ketuan, vying for control, ultimately eroding its market dominance. To address these issues, recent initiatives aimed at reviving its financial stability involved a salary restructuring in the first quarter of this year. This restructuring divided the original fixed salary into a basic wage and a performance-related salary, linked to employees’ rank within the company.
Despite these efforts, Bitmain’s financial situation has continued to deteriorate. In a company announcement released in September 2023, Bitmain officially acknowledged its negative operating cash flow and the subpar performance of its mining machines. This dire situation prompted the suspension of employee salaries, with the company indicating that payments might potentially resume following the October 7 holiday, contingent on the circumstances. As of October 8, however, employees had yet to receive their unpaid wages, and their year-end bonuses for 2022 remained outstanding.
This development coincides with Bitmain’s efforts to regain its footing through a notable strategic move. In August, Bitmain was exploring the possibility of taking an equity stake in Core Scientific, a prominent North American cryptocurrency mining company, as part of Core Scientific’s bankruptcy restructuring strategy. The proposed agreement, pending final documentation and court approval, entails Bitmain acquiring 27,000 S19j XP bitcoin miners from Core Scientific.
While the potential deal with Core Scientific offers a glimmer of hope for Bitmain, the suspension of employee salaries highlights the uncertainty surrounding the company’s future. It remains unclear whether the finalized agreement with Core Scientific could provide the much-needed financial turnaround for Bitmain or if the company’s financial challenges will persist and worsen.
