If BTC Hadn’t Bounced, Bitmain Might Not Have Survived
The return of Jihan Wu to the main position of the Chinese mining company Bitmain was a complete surprise for many. In order CoinDesk hit Wu's speech transcript, he uttered at the meeting on Tuesday.
Returning to the company, Wu notified employees about the dismissal of Micree Zhan, with whom he founded Bitmain in 2013. Explaining his decision later, he stated:
“Zhan escalated what should be a disagreement on an ordinary company business decision to the level of power struggle.”
According to Wu, disagreements between the two leaders arose in 2015, but they reached their peak in December 2018, when Bitmain decided to carry out large-scale reductions. Wu claims that he, along with three other founding partners, approved the decision, while Zhan was against it.
“Everyone knows in 2018, the company spent unnecessary and hasty investment everywhere on research and development projects and hiring dozens and hundreds of people without a second thought. Everyone supported the layoffs,” he said.
Zhan demanded to hold a second meeting on December 17 and appoint himself the only leader and also threatened to deprive the right to purchase shares of those who were against him.
Disagreement within the company began to cause problems with partners, while the cryptocurrency market was at the bottom.
“Right on that day, we had suppliers calling us to push for clearing accounts payable. The Bank of Beijing already agreed to give us credit lines but that got cut the next day,” Wu said, adding:
“Had it not been the bounce-back of the Bitcoin price in later months […] the company may not have been able to weather through the winter last year.”
But even despite the rise in the price of Bitcoin this year, the position of Bitmain remains far from ideal.
“Our mining equipment’s market share is declining. Our mining pools’ dominance is also declining,” Wu said on Tuesday.
Over the past few months, Bitmain rivals represented by Canaan, WhatsMiner and InnoSilicon have been actively increasing sales, while the company-controlled mining pools BTC.com and Antpool have lost their positions against the backdrop of the rapid rise of F2pool and Poolin, which took the first and second place in terms of controlled hash capacities respectively.
The differences between Wu and Zhan were also caused by the “crazy” ideas of the latter, namely the development of the direction of artificial intelligence, which is in no way connected with the mining of Bitcoin.
“AI is a venture investment for Bitmain [...] it still needs a considerable amount of investment. We have to keep making money from our main business in order to have the venture investment in AI,” Wu said.
The return of Wu occurred while Zhan was attending a conference in Shenzhen where he promoted Bitmain AI products. According to Tencent News, he was simply not allowed to enter the company’s office.
However, a major question remains unanswered: How did Bitmain manage to dismiss Zhan from all of his roles given that he was the chairman and major shareholder?
According to the documents drawn up by the company in September 2018 for conducting an IPO, then Zhan owned 36% in the holding company Bitmain, and Wu — 20.25%.
Author: Marko Vidrih