Co-Founder Of Bitmain Resigns As CEO And Chairman

January 27, 2021 02:30 PM
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Crypto is extending a broad sell-off with Ethereum (ETH) volumes continuing to exceed those of bitcoin (BTC) on Bitfinex. DeFi tokens Uniswap (UNI) and Aave (AAVE) are the exceptions in the Top 20 coins, both seeing 24-hour gains in excess of 10%.  

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BTC mining hardware producer Bitmain’s Co-Founder Jihan Wu has resigned as CEO and Chairman with the firm. The move seems to bring an end to a power struggle with the firm’s other Co-Founder, Micree Zhan, that has been ongoing since 2018 and brought the firm near bankruptcy. 

Bitmain was founded by Jihan Wu and Micree Zhan in 2013. By 2018, before infighting between the 2 principals began, Bitmain was the world’s largest mining hardware producer, responsible for producing half of the equipment used by miners across the world. In June 2018, Wu told Bloomberg the firm saw USD 2.5 billion-worth of revenue in 2017, up from USD 277 million the year prior, and that an IPO was under consideration. 

By September of that year, Bitmain had officially filed for an IPO with the Hong Kong Stock Exchange (HSE). The firm was hoping to raise as much as USD 1 billion. However, its prospectus was allowed to expire 6 months later without an offering taking place. While the HSE didn’t reveal its review process, media reports from the time suggested that regulators had expressed doubt over the viability of the offering considering the rise and fall that the crypto market had witnessed in the meantime. 

In 2019, crypto media began to report on significant infighting when a transcript of an internal meeting leaked, which publicly showcased Wu explaining why he believed it was necessary to oust Zhan. The infighting led Wu to establish subsidiaries with the aim of creating separate supply chains and sales for the firm’s flagship AntMiner machines. In return, Zhan organized what was described by crypto media at the time as “takeovers” of production facilities and withholding of shipments to clients that had made payments to Wu. 

In his resignation letter, Wu wrote that “[t]he disagreement between Micree [Zhan] and [himself], the two co-founders of Bitmain, has been finally settled in an amicable and, more importantly, a constructive manner.” 

Under the deal, Zhan purchased USD 600 million-worth of shares from Wu and a group of founding shareholders. Wu will now head Bitdeer, a crypto mining firm with operations in Norway and the U.S. 

The apparent resolution of the Bitmain power struggle saga seemingly puts to an end to a crisis that’s engulfed one of crypto’s largest and most important firms. Bitmain has, despite the infighting, remained the leader in mining hardware production. As such, the reaching of an “amicable” and “constructive'' deal is a positive development for the entire crypto space. 

We’ve repeatedly pointed to a sustained increase in BTC hash rate as a sign of the network’s growing adoption. The ability of miners to invest in and access mining equipment in order to expand their operations is key to sustaining the hash rate’s expansion. For example, in September 2020 Bitmain partnered with Digital Currency Group’s mining-focused subsidiary Foundry to provide financing for North American miners.

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