By
Bena Ilyas
April 25th, 2024
According to Kyle Samani, after mass discharge of employees, Bitmain would liquidate its crypto-assets worth of $316 million, which could be bearish for Bitcoin Cash and Litecoin prices in 2019.
Bitmain, the world’s largest manufacturer of ASIC chips for Bitcoin mining, is reportedly running out of money, that’s why its operations across mining and blockchain development have been stopped. Therefore there are rumors about the company laying off half of its staff. The layoffs will likely occur across all divisions, but those working on newer investments like artificial intelligence and blockchain technologies are expected to be impacted most.
Bitmain has already fired the entire Copernicus team which was working on the development of a new Bitcoin Cash client.
Bitmain commented:
“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.”
Kyle Samani, the co-founder of crypto fundMulticoin Capital, has made a guess that such a situation may soon lead to Bitmain liquidating its crypto stockpile, including lots of Litecoin (LTC) and Bitcoin Cash (BCH) tokens.
This is extremely bearish for BCH and LTC
The only reason to make cuts this drastic are because you're about to run out of cash
Meanwhile, they still have 1 BCH and 1M LTC on their balance sheet. Those are going to be liquidated soon to keep the lights on https://t.co/kneSRcK2li
— Composability Kyle (@KyleSamani) December 26, 2018
The current Bitmain’s holding is unknown, however, a leaked financial document revealed in August that Bitmain holds 930,932 Litecoin (approximately $28.6m), 1,021,316 Bitcoin Cash (approximately $176.7m), 22,082 Bitcoin (about $83.3m), 312,424 DASH (approximately$26m), and 1,097 Ethereum (~$142k) tokens. In general, Bitmain has $316 million worth of cryptocurrency reserves.
If Bitmain really ran out of money, selling off holdings would take place. However, liquidating LTC and BCH could start anytime. That’s why crypto expert believes that next year Litecoin and Bitcoin Cash prices are likely to drop. The latter has dropped by more than 60% since the beginning of the hash war November.
Right now it is difficult to say definitely what the company is going to do next, but it is clear that investors and traders should keep a watchful eye, taking into consideration the recent hard times at the crypto market.
What’s Next?
At the beginning of December, Bitmain got a refusal from the Hong Kong Stock Exchange (HKEX) to approve an IPO. Bitmain had all chances to succeed in going public in Hong Kong. But HKEX regulators are not satisfied with the state of the crypto industry due to the extremely high crypto market volatility, that’s why the company got a rejection.
It is not clear what will happen next. The Bitmain layoffs could stabilize its outflows against the reported losses in the near-term, and some believe that Bitmain could file another IPO prospectus in the future after fixing its infrastructure.
Others think that the company could address venture capitalists for additional funds or, as Kyle Samani predicted, sell some part of their digital assets. As Bitmain still holds a 67% share in the market for bitcoin mining equipment and provides about 60% of the mining industry’s entire computing power. These funds would be enough for the company to survive.