Many crypto giants experienced accelerated growth during the bull market of 2017. However, a large number of these major crypto players had to downsize as a result of the prolonged bear market in 2018.
Bitmain sees red
Bitmain, the largest ASIC-based mining hardware company in the world, accounted for a market share of 74.5 percent based on sales revenue in 2017. As of June 2018, the company had 11 mining farms in China with an aggregate capacity of 200,000 rigs, according to the info provided in its IPO filing.
Bitmain also operates two of the largest mining pools in the world: BTC.com and Antpool. Still, over 90 percent of the company’s profits come from the sale of ASIC miners.
In 2018, poor sales of mining hardware due to decreased mining profitability hampered Bitmain’s planned IPO. This downward trend also caused the value of the company’s cryptocurrency reserves to plummet. To add to its woes, Bitmain suffered losses in the Bitcoin Cash war and felt the impact of wider hostility towards Bitcoin. Negative media coverage of the company reflected these poor results.
According to a Nasdaq article:
Bitmain actually lost $400 million in Q2.
As a result, Bitmain is laying off staff. Some sectors, such as the company’s AI initiative, are apparently suffering huge cutbacks.
Reports in China are now saying that Bitmain layoffs are likely to be as high as 85%, not 50%. All non-essential business units are cut. Teams working on AI initiatives are decimated. #BitmainIPO https://t.co/wOrfUYukpg
— Samson Mow (@Excellion) December 26, 2018
Despite worsening financial results, Bitmain raised over $800 million in venture capital funding in 2018. It’s not clear how much the company expects to raise when it goes public in 2019. Early estimates indicate Bitmain could raise around $14 billion. To put things in perspective, this is more than what Facebook, the largest IPO to date, raised. However, according to the South China Morning Post, Hong-Kong regulators might be reluctant to approve IPOs by crypto companies before establishing a proper regulatory framework.
Struggling to reach ConsenSys
ConsenSys is also downsizing. The company, which is owned by Ethereum co-founder Joseph Lubin, has spent millions to support dApps and projects built on Ethereum. But the prolonged bear market has forced ConsenSys’s hand. Now, the company is rescaling by laying off employees and abandoning less promising projects.
Some crypto exchanges, such as Kraken and Coinfloor, the oldest UK-based exchange, also appear to be feeling the pinch. It seems both exchanges laid off a part of their staff in the second half of 2018.
If these trends are anything to go by, it seems likely that other crypto giants will soon follow suit by cutting down on staff.