Bitmain, the largest manufacturer of mining equipment in the crypto industry, has been suffering some financial challenges recently. A lawyer for the company explained that its losses for the past year totaled $60 million in a recent court hearing.
Snowballing Financial Strains Leave Bitcoin Hamstrung
The confession came at the People’s Court in Beijing, in a case between Bitmain and three of its former employees. The former employees accused the mining firm of not paying their compensation and bonus packages, eventually terminating them in early 2020.
In addition, the employees claimed that Bitmain had gotten $300 million in 2019, allowing it to give special bonuses of up to $11,000 to every worker in May of this year. Defending the company, a lawyer explained that Bitmain had recorded terrible financial performances in 2018 and 2019, preventing the company from paying 13th-month payments and bonuses for workers last year.
The lawyer pointed out that Bitmain lost about 400 million yuan ($60 million) in 2019. This, combined with about a $500 million loss over Q3 and Q4 2018, left the company in a dire financial situation. Despite the losses in the second half of 2018, Bitmain managed to finish the year with a $450 million profit. However, things took a significant turn for the worse in 2019, which led to the company’s inability to fulfill its obligations to terminated workers.
2020 Hasn’t Been So Great Either
Bitmain has struggled significantly in 2020 as well. Thanks to internal conflicts and the coronavirus pandemic, the firm has taken a significant hit to its bottom line. The former problem also affected its operation, with Bitmain having to delay shipments for its current flagship mining device.
In July, Bitmain confirmed that it would delay orders for Antminer mining rigs till October, citing “external interference on company operation.” It is unclear whether the shipments have now been processed.
There have been some bright spots in the year, with Bitmain inking a deal with mining firm Riot Blockchain to deliver rigs. Per an August announcement, Bitmain confirmed that it signed a $17.7 million purchase agreement that would see it send 8,000 Antminer S19 Pro rigs to Riot Blockchain. The deal will see Bitmain send the rigs at 2,000 units every month, with deliveries starting next month.
Still, recent developments show that the mining giant’s financial problems might still be on. Earlier this month, Jonas Schnelli, a major Bitcoin Core contributor, claimed on Twitter that Bitmain had cut funding for developers maintaining its Bitcoin-related software.
Schnelli explained that he, along with fellow Bitcoin Core contributor Joao Barbosa, had lost their sponsorship with Bitmain. He added that members of the crypto community should come together to help the development team, thanking Bitmain for its support thus far.