Bitmain, founded in 2013, has been the world’s largest computer chip company for bitcoin mining, with a revenue record of over US$2.2 billion in 2017. In August 2019, Bitcoin’s hash rate distribution Bitmain was the top largest mining pool. Three months later, BTC.com Antpool’s old glory has declined. This has resulted in a significant reduction in the share of Bitcoin block daily and weekly rewards. The Bitcoin mining pools, headed by Bitmain, are still among the top four miners but have ceded their leadership to Poolin and F2Pool, which is a Chinese mining pool. The lag of the two pools is happening as bitcoin is trading at prices way above breakeven for most foreign miners. What exactly occurred to the two leading miners?
How Bitmain lost bitcoin mining leadership just in three months
Why has Bitcoin lost its power in such a short period? The fast decline in BTC mining power is as a result of Bitmain’s leadership drama. What really happened?
A civil war sees a crypto billionaire ousted from Chinese bitcoin mining giant Bitmain. Jihan Wu, the co-founder Bitmain sent out a dramatic message to completely expel his counterpart Micree Zhan from the organization. Wu even sent warnings to block him from physically accessing the Bitmain headquarters. In the email with the subject “important notice” addressed to all staff, Wu wrote that he dismisses Zhan Ketuan from all his roles in the company. Traders are now worried that Zhan could dump over 1,5 billion Bitcoins as a result of retaliation.
In the past year, December 2019, Bitmain shuttered some overseas operations and also cut half of its workforce. The company had filed an application to float shares in Hong Kong three months prior, which expired in March. The company’s failed attempt to list in Hong Kong resulted in both co-founders stepping down as co-CEOs. According to its Hong Kong initial public offering application, Zhan owned 35% of Bitmain while Wu owned 21%.
The failure of IPO has greatly contributed to the suffering of Bitmain. As the market is on recovery, sales have continued to be weak, and its competitors are on its heels. Bitcoin mining rigs from Canaan Mining and Inn silicon are taking over the market share. According to local news reports (in Chinese), the company secretly filed an IPO prospectus to the US Securities and Exchange Commission (SEC) a week before the Zhan’s dismissal. The drama is the latest in a string of executive wrangles since the cryptocurrency mining company delayed its IPO.
In conclusion, A pool is also not entitled to a single bitcoin mining operator hence anyone is legible to join it. Thus, mining firms can switch affiliation. A larger pool results in a corresponding higher chance of winning block rewards, and receiving a fraction of BTC for the mining effort. As Bitmain’s pools have been lagging behind in the past three months, the overall hash rate for Bitcoin’s network has continued to set a series of mining records. As the exact composition and hashing power of BTC mining pools are reported by different methods, it is hard to determine what happened to the two leading miners.