Ousted Bitmain Co-Founder Halts Antminer Shipments

The news was revealed by the head of marketing at Hashkeyhub, Molly [@molllliy], on her Twitter account, citing a translation from Weibo, China’s leading microblogging portal.

“Don’t order antminer from bitmain anymore, cuz you won’t be able to receive it for awhile. after Micree took back the control of bitmain, he’s now control the bitmain’s factory in Shenzhen , and started to stopped the shippment of antminers.”

Power Struggle Intensifies

Local media outlet, Blockbeats, also reported the development last week, adding that company co-founder Micree Zhan, also known as ‘Zhan Ketuan’, has taken control of the facility and prevented workers from processing orders and shipments. The firm’s 2018 initial public offering prospectus details a subsidiary called Shenzhen Century Cloud Core Technology, which is responsible for manufacturing and packaging its Antminers at a warehouse. Zhan remains a director of this subsidiary despite his removal from Bitmain itself. Earlier this month, BeInCrypto.com reported that Zhan stormed the firm’s Beijing offices with a group of armed guards in order to seize control. He also reportedly offered cash bonuses of RMB 10,000 (around $1,400) to employees if they returned to work that same day.

Turbulent Past, Gloomy Future

Bitmain has had a turbulent few years of power struggles, leaving the firm deeply divided. The founders have forced employees to take sides. Meanwhile, many customers have been left in the dark. Zhan claimed that fellow co-founder, Jihan Wu, had illegally removed him from the company in November 2019. Legal action followed and Bitmain suffered as a result. The company laid off staff and frequently shuffled management. As the battle rages on, Wu has attempted to reassert his power. Last week he issued a statement claiming he is taking legal action against Zhan for halting shipments. Bitmain appears to have ‘forked’, added Molly, who explains that Wu still owns the intellectual property. She also argued the negative case for Bitcoin Cash which Wu outwardly supports. According to CEO of BitRiver, Igor Runets, who runs the largest mining co-location site in Russia, clients are switching to hardware from rival firm MicroBT. Speaking to Nasdaq, he added;

“We have many clients who are waiting for [AntMiner] S19 devices from Bitmain. Customers were not satisfied with the long wait time and this I believe was partly caused by internal issues. We really hope the situation will get to normal by September and won’t affect production time. Otherwise there will be a massive erosion of trust in the company,”

Social Media Hijack

Reports also indicate that Zhan may have gained access to Bitmain’s official WeChat channel. A letter posted on the Bitmain company website last week stated that unauthorized actors had gained access to the account. It also claims that posts made since last Thursday were all fake. Later that same day, another letter appeared with an updated company seal, ordering all employees back to work. The letter added that the Beijing office will enforce attendance checks for June and that all employees at that office will only receive full salaries if they have checked in for 13 days. It appears the power struggle is far from over. Ultimately, though, Bitmain and its clients will suffer. The drama plays right into the hands of rival Bitcoin mining hardware manufacturers.

Fire Damages Mining Farm

In a related development, a fire at a Bitcoin mining farm in Yunnan province on Friday destroyed thousands of mining rigs. Blockbeats posted a video of the incident via Twitter over the weekend, adding:

“This Friday night, a fire occurred in a large #Bitcoin mine in Yunnan, China, causing thousands of bitcoin mining machines to be destroyed. The local police were investigating.”

It remains to be seen whether the fire was related to the ongoing power struggle at Bitmain. Bitcoin prices retreated during the Asian session on Monday morning, falling 3% to below $9,200. Prices have recovered somewhat since. BTC market share is also on in decline this year, and mining hardware woes are only likely to add to that sentiment.