Falling value of Bitcoin hits related companies in China

By Zhang Hongpei Source:Global Times Published: 2019/2/19 22:23:40


Workers conduct tests on Bitcoin miners at a Bitmain production base in Shenzhen, South China's Guangdong Province. File photo: VCG



The glory days of Bitcoin-related business, including mining machines of the coin, may be over in the past year as the falling value of the cryptocurrency is hitting demand for related products.

Chinese crypto-mining giant Bitmain Technologies has laid off almost two-thirds of its employees, mainly those engaged in several business lines such as blockchain, artificial intelligence and semiconductors. The company's headcount now stands at about 1,000, compared with more than 3,000 prior to the layoff, domestic news site jiemian.com reported Tuesday, citing a former employee.

Bitmain accounted for more than 70 percent of the world's miner sales. Miners are facilities with thousands of machines that create Bitcoin by solving complex mathematical puzzles.

Bitmain saw its revenues and profits soar in 2017, triggered by a boom in demand for miners as the digital currency entered a bull market.

However, sales nosedived in 2018 as the coin's value shrank, directly leading to the mass layoffs, said the jiemian.com report.

At the end of 2018, Bitcoin had witnessed a nearly 80-percent drop in network value, falling from $280 billion to $56 billion and the broader market lost nearly $700 billion of total capitalization, media reports have said.

The Beijing-based start-up reportedly began cutting its workforce in December. Bitmain Technologies could not be reached for comment as of press time.

Guo Dazhi, research director with the Zhongguancun Internet Finance Institute, told the Global Times on Tuesday that businesses related to Bitcoin and blockchain have been affected to varying degrees in the past year due to the declining trend in the market.

Huobi Group, a Singapore-based cryptocurrency exchange, also "optimized" its staff last year. "But we'll continue to hire new people," a PR representative of Huobi told the Global Times on Tuesday.

Huobi.com, a popular domestic Bitcoin trading platform, was shut down in September 2017 after Chinese authorities ordered a ban on initial coin offerings (ICOs).

The People's Bank of China (PBC), the country's central bank, and several other agencies released a document on September 4, 2017, in which they voiced concerns over risks in virtual-currency trading and suggested measures to curb such risks, including barring new issues of ICOs.

As of last April, Bitcoin trading platforms had virtually disappeared from the Chinese mainland, according to the China Banking and Insurance Regulatory Commission.

Zhou Xiaochuan, the former governor of the PBC, said in a press conference in March last year on the sidelines of the annual session of the National People's Congress that the development of digital currencies should be carefully watched and more discretion should be exercised over virtual asset trading.

According to Zhou, regulation of the emerging sector should be dynamic.

"It is still the trial-and-error phase for the development of digital currencies. But blockchain, the underlying technology of the coin, should be encouraged and pushed forward as its day is coming," said Guo.

"Blockchain is currently transforming from a concept to a practical application. In the process, both opportunities and risks remain," he added.



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