By
Mayowa Adebajo
April 15th, 2024
Bitmain’s Israeli Development Center shuts down with the firm’s China-based IPO approaching. The current bear market is somewhat to be blamed for the drastic decision.
The slump in Bitcoin price has affected the big fish and small players in the mining industry. Bitmain’s development center set up two years ago in Ra’anana will close down this week. The company announced that all its 23 employees will lose their jobs. The VP at Bitmain, Glikberg, will also leave.
The Israeli center ranks among the biggest companies in the entire global blockchain industry. According to Globes, the shutdown announced on Monday, December 10, was caused by the prolonged cryptocurrency bear market. According to the report, Glikberg said:
“The crypto market has undergone a significant shakeup in the past few months, which has forced Bitmain to scrutinize its various activities around the globe and refocus its business in accordance with the current situation.”
The court cases and the hard forks could not bring the company down. However, the persistent declines in the market are forcing many players in the crypto world to close down.
Company Overview
Bitmaintech Israel started operating in 2016. Its primary aim was to explore the use of blockchain technology. They also create infrastructure behind Sophon, Bitmain’s artificial intelligence (AI) project. The 23 employees were also working on the Connect BTC mining pool until the prevailing conditions proved their operations uneconomical.
Bitmaintech Israel is yet to respond to any questions after this press release.
Lawsuits and Taxes
Currently, Bitmain is facing two lawsuits. The first allegedly targeted Roger Ver, Bitmain, the Kraken Bitcoin Exchange, and Bitcoin.com. This case claims that the defendants used unfair strategies to manipulate the BCH network for their benefit.
The second one is a class action lawsuit of up to $5 million focused on unauthorized mining. It was filed in the North District Court of California against Bitmain’s Chinese and American entities.
Israel experienced a crackdown in early December targeting unreported crypto earnings. Calcalist reported that Israeli tax authorities opened tax accounts for hundreds of Israelis who purportedly hid crypto-related revenues. Since Israeli authorities consider cryptos as financial assets, they subject them to a 25% tax for private investors.
Bear Market Shutdowns
Before the announcement, Bitmain has strived to expand their dominance in the crypto world. Although the cause of this closure seems unknown, the ongoing Bitcoin market slump is acknowledged as a contributing factor. The dwindling prices of Bitcoin Cash and Bitcoin have resulted in deteriorating mining profit margins. After that crash, the margins fell to around 31% for Bitcoin.
The biggest Antminer Application Specific Integrated Circuits (ASIC) manufacturer worldwide is Bitmain. Furthermore, it also manages and operates a large Bitcoin mining pool, Antpool. The company has also made market waves all through the year due to an upcoming IPO based in China.
The firm also underwent a considerable shakeup on its board of directors. Their ASICs are responsible for approximately 70% of all Bitcoin mining activities worldwide.