Category Archives: Bitmain

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Chip Makers Blame Slow Profits on Mining Slump, Phone Sales Also Down

Chip Manufacturers Blame Mining Slump But Phone Sales Also Down

Taiwanese chip manufacturer United Microelectronics Corporation (UMC) has blamed its 10% drop in revenue for the last quarter of 2018 on a downturn in mining.

Mining hardware sales are always affected when the demand for cryptocurrency is slow, due to reduced levels of mining activity, but there are some who feel mining is too often the scapegoat for a drop in chip sales. TSMC, the manufacturer responsible for supplying chips to Bitmain, were also quick to attribute their losses to a downturn in the crypto market. The company’s co-president Jason Wang commented:

“Looking into the first quarter of 2019, we anticipate further deceleration in customers’ wafer demand, due to a softer than expected outlook in entry-level and mid-end smartphones as well as falling cryptocurrency valuations.”

Some observers have commented that this drop in smartphones sales is more significant than some companies like to indicate as profits from mining hardware have recently outperformed smartphone sales. For example, as mining demand drove up profits significantly in 2017, new smartphone shipments only increased by 2%.

The argument is, given that smartphones are the greatest driver of chip sales, a declining market in mobiles has more impact on chip sales than a decline in the crypto mining sector. Some argue that the makers of cellphones need to address this and develop new markets, particularly in developing areas such as Africa and South America where smartphone ownership is still relatively low.

Companies manufacturing hardware need to diversify, given that cryptocurrency is still in its youth, in order to ride out lean periods. The cryptocurrency market will fluctuate, as clearly illustrated by the last two years. The crypto winter “blame game” will run out of steam very quickly when cryptocurrencies become a fact of life and demand for hardware will be overtaken by demand.

 

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Bitmain Targets Development in Revamped 2019 Business Model

Bitmain Targets Development in Revamped 2019 Business Model

Bitmain appears to be in the process of repositioning itself towards development to make 2019 a far more successful year after the disappointments and layoffs of 2018 as cryptocurrency mining came under pressure.

The Beijing mining giant recently referred to last year’s negatives and positives in its latest roundup, but now seems more focused on how to turn things around after rationalizing its business model, not only through the already much hinted administrative changes at the head of the company but also by targeting development. A company blog has recently clarified its direction in 2019, suggesting that:

“Our mission is to produce hardware and software, as part of our commitment to contribute towards the security and stability of a multitude of cryptocurrencies. We look forward to continuing this effort this year, and contributing to a distributed, decentralized world that empowers everyone.”

Bitmain’s recent blog post sees the cryptocurrency industry stabilizing this year, echoing many analysts’ suggestions that institutional investors will revitalize the markets, and clearly envisages a role for ASICs, simplifying cryptocurrencies in a way that encourages their adoption as both a useful and a usable asset.

The company is not alone in hoping that sensible regulation will lead to greater adoption of crypto finance, although such moves will clearly have to wait in the US, where the SEC is running a skeleton staff due to the prolonged government shutdown.

According to the blog, now that the company has undergone significant staff cuts, there is a feeling at the top that a new leaner operation will support Bitmain’s aim to build a more sustainable and scalable business, and suggests that “part of that is having to really focus on things that are core to that mission and not things that are auxiliary”.

Time will indeed tell if consolidated focus and renewed energy in a scaled down company does make 2019 Bitmain’s year of development.

 

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Anonymous Bitcoin Miners Fill Void as Bitmain Sizes Down

Anonymous Bitcoin Miners Fill Void as Bitmain Sizes Down

Blockchain research unit Diar has published new data which illustrates the degree to which anonymous Bitcoin miners are now validating more blocks than any other pool.

This research follows recent announcements that Bitmain, the world’s largest maker of cryptocurrency mining chips, is reported to be laying off up to 50% of its staff in 2019 following huge staff cuts in 2018 in its 11 mining farms operating in China. This forced the company to lay off 3,000 of its staff in December having initially grown from 1,000 employees.

With larger producers such as Antpool, BTC.com, and ViaBTC now validating fewer blocks than this time last year and Bitmain pulling back from mining, it appears that “unknown” miners are becoming a dominant factor of the space. Diar reported:

“[Unknown] miners closed December having solved a whopping 22 [percent] of the total blocks, up from 6 [percent] at the start of last year… The Bitcoin network is currently less likely to experience an attack given the fact the BTC.com controlled pools have lost dominance over the network.”

At the beginning of 2018, Bitmain’s mining pools represented 53% of Bitcoin’s hash power, but with the recent reduction of the company’s influence on the crypto mining industry, those wary of 51 percent attacks are now expressing relief that such attacks will now be far less likely in the future. This means that the world’s flagship cryptocurrency is becoming more decentralized due to Bitmain’s diminishing influence along with the return of anonymous miners.

However, Diar has warned that the growth in hash rate observed over January may be unstainable, especially if Bitcoin returns on its 2018 bearish trend. Bitmain will be watching the market and significant changes could see a return to the former giant’s mining dominance.

 

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Mongolian Mining Takes a Leap Forward with Japanese Investment

Mongolian Mining Takes a Leap Forward with Japanese Investment

With the announcement that Japanese company Ginco is expanding its mining capacity, Mongolia is set to experience a surge in crypto mining in 2019, despite the downturn in Chinese mining activity.

The company best known for its Japanese crypto wallet is tripling its output this year from 600 to 1600 miners in the Chinese province.

The news was unexpected given recent developments within the Chinese mining sector. Bitmain, who as of 2018 had 11 mining farms operating in China was forced to lay off 3000 of its staff in December having grown from 1000 employees. A recent statement from the world’s largest maker of cryptocurrency mining chips suggested it would be laying off up to 50 percent of its staff this year.

Ginco’s news comes just a day after Bitmain released more bad news for investors in China that it was stopping the development of their mega mining project in Texas due to the sustained bear market which dragged on through most of 2018.

The news from the Japanese company is certainly good news for Mongolia but not without its difficulties, suggests CEO Yuma Furubayashi who doesn’t necessarily see an easy ride ahead. He claimed that: “The business environment is increasingly harsh, but we can still produce a profit.”

The CEO also suggested that the company had other projects in the pipeline apart from the Mongolian mining expansion; such projects include providing a repair service for existing mining devices.

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Bitmain CEOs to Make Way for New Faces

Crypto Mining Rig Giant Bitmain May Appoint New CEO Soon

Top cryptocurrency mining rig maker Bitmain may be in for some administrative changes soon, with Wang Haichao, currently head of product engineering, tipped to be the new CEO in place of co-CEOs Wu Jihan and Zhan Ketuan, as reported by South China Morning Post.

Currently, no public announcement has been made by the company or any of the parties involved about this major managerial shift. However, the source said people familiar with the matter revealed that this change will reportedly have co-founders Wu Jihan and Zhan Ketuan step aside from managing daily affairs of the company. More so, while they remain as members of the board, they will still be involved in calling the shots on big decisions as “Wu and Zhan, who founded Bitmain in 2013, hold 21% and 37% of the company respectively, according to the IPO prospectus”. Wang is said to have assumed the new role in preparation for the transition since December last year.

Changes happening in the company, including the layoff of about 50% of its staff that occurred last month, are likely due to the bear market conditions that lasted throughout 2018. More so, it was reported that the incumbent decision makers had trouble agreeing with each other and that at one time, Wu was allegedly expelled from the board, though this was later dismissed as a false claim.

With the ongoing reshuffling of administrative chairs, operations may look green for the company once more, as currently, Bitmain has been through a few setbacks and may need to make some strategic changes to make headways in 2019. It is in the process of being listed for an initial public offering (IPO) with the Hong Kong Stock Exchange (HKEX), though it hasn’t been favorable so far, probably due to the volatile conditions of the cryptocurrency market and “essentially the lack of regulation”, according to HKEX.

Wang has compelling hands-on experience in software programming and product engineering. Having graduated from Beijing’s Tsinghua University – the MIT analog in China – he worked as an engineer with Availink, from 2010 to 2017. He seems to be an excellent candidate, being familiar with the operations of the company with respect to product management. It would be of public interest to both shareholders and consumers to see what changes the company will experience during Wang’s tenure. BitcoinNews will track the changes as they unfold.

 

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