Bitmain, a prominent figure in the Bitcoin mining sector, has taken the step of suspending employee salaries in response to ongoing financial difficulties and setbacks in its mining operations.
Reports from within the company reveal that this suspension encompasses both performance-based and basic wages, impacting all Bitmain employees.
The severity of this action is emblematic of a tumultuous period for Bitmain, a company that once enjoyed over 70% of the global Bitcoin mining machine market.
Adding to the strife, employees are now grappling with a 50% reduction in their base salaries, exacerbating their financial hardships.
Sources within Bitmain have disclosed that outstanding remuneration from the previous month remains unpaid, further heightening concerns.
Bitmain’s financial tribulations have persisted over time, partly attributed to internal power struggles between its founders, Wu Jihan and Zhan Ketuan, which adversely affected its market dominance.
The company had previously attempted to address these financial challenges through a salary reform implemented in the first quarter of this year, which divided the original fixed salary into basic and performance-related components.
Regrettably, these measures failed to steer Bitmain back to prosperity.
The recent suspension of salaries, along with workforce layoffs and compensation cuts, mirrors the financial dilemmas that blockchain-focused firms are currently grappling with.
In a company notice from September 2023, Bitmain confirmed its negative operating cash flow and subpar progress in its mining machines.
Consequently, the decision was made to suspend salaries with a tentative plan to resume payments after the 7 October holiday, contingent on the financial situation.
However, as of 8 October, employees were yet to receive their unpaid wages, and 2022 year-end bonuses remained outstanding.
Bitmain’s directive emphasised that:
“Given the current state, especially with our mining progress not matching our standards, EMT has chosen to pause partial September wage payments. We anticipate resuming these after the 7 October holiday, contingent on prevailing circumstances. It’s imperative for supervisors and team members to work towards achieving our POTA.”
These developments transpire as Bitmain endeavours to recuperate its standing with a significant business manoeuvre.
In August, Bitmain explored an equity stake in Core Scientific, a leading North American cryptocurrency mining company, as part of the latter’s bankruptcy restructuring initiative.
This proposal, still pending final documentation and court approval, would see Bitmain acquire 27,000 S19j XP bitcoin miners from Core Scientific.
The success of this arrangement could offer Bitmain a lifeline; however, the suspension of employee salaries underscores the uncertainty shrouding the company’s future.
However, Bitmain’s trajectory remains uncertain, and the industry as a whole confronts financial hurdles and shifts in leadership that reverberate throughout the crypto world.