Equipment for the mining of cryptocurrencies pulls companies down
Beijing bitcoin giant Bitmain confirmed it would fire some of its employees due to business adjustments being made. This announcement was released after a long collapse in the cryptocurrency markets, as a result of which bitcoin lost more than 80% of its value from the historic high in December 2017.
According to the head of the company, the composition of their employees has undergone some changes, as the Corporation continues to build a long-term, sustainable and scalable business. And their mission is to focus on things that are key to this, not auxiliary.
The company issued this statement after reports of the impending dismissal spread through local Chinese news agencies. The reports mentioned discussions on the social networking site MaiMai, where verified Bitmain employees referred to the organization’s plans to downsize by half its employees.
The news of the dismissal, though shocking, but hardly unexpected, at least for the company’s employees. Previously, the company ceased operations in Israel just 2 years after its foundation. That is, all Bitmain Israel staff, numbering up to 23 people, was fired.
By the way, the company has already reported large losses in the third quarter of 2018. According to surfaced data, the corporation was experiencing the worst quarterly profit, losing $ 740 million.
According to the management, now Bitmain employs about 3100 people, even a few hundred more than expected. And at the beginning of the year the staff was only about 1000 people.
Collapse of equipment for cryptocurrency mining
According to a document published by GMO, it was confirmed that Japanese giant decided to close its digital coin mining unit. In its report, the corporation confirmed that in the future it will not “develop, produce and sell” cryptocurrency mining equipment, because of the huge losses in this industry.
The published document also highlights the fact that the bitcoin mining division brought great damage to the company in the 4th quarter of 2018. In general, the consolidated losses of GMO for this period amounted to 35.5 billion yen (320 million dollars), while the non-consolidated losses rose to 38 billion yen, equivalent to 334.5 million dollars).
The report further states that given the changes in the current business environment, it is expected that corporations will not easily recover the book value of business assets associated with mining.
It should be noted that GMO opened its own mining division in December 2017 in the midst of the growth of bitcoins.
Analysis of the earnings report confirmed that energy costs were a major factor affecting the performance of a corporation. That is why GMO announced plans to move the bitcoin mining business to a place where they can mitigate the effects of these energy costs. The company is even considering the possibility of attracting alternative ways of energy production.