Bitmain Struggle Heats up as the Two Battling for Control of Mining Farms and Antminers Inside
The drawn-out power struggle inside bitcoin mining giant Bitmain is getting nastier, as an announcement made earlier today by the Antminer sales team indicated.
According to the announcement published on the WeChat account of Antminer pre-sale, about 10,000 Antminers in one of Bitmain’s largest mining farms in Inner Mongolia have been “illegally transferred” by its former employees.
The company said they have reported it to local police and asked the public not to buy Antminers from unknown sources. No clue to the whereabouts of that quantity of mining machines has been found at present.
The Antminers involved include S17 Pro/S17/T17/S15/T15/S9 Hydro series, Z11 models, some small coin mining rigs, and internal test prototype.
In an internal letter last Friday, Jihan Wu had disclosed that Zhan’s side had relocated the over 10k mining machines to somewhere nobody has a clue and he suspected these machines might have been resold.
It is estimated that 10,000 second-hand mining rigs can bring about 60 million – 80 million yuan (roughly $10 million) in cash, which is much needed for Zhan’s side as the finances of the company are under the control of Wu.
However, it is legally arguable whether Zhan is guilty as the “robbed” mining farm is wholly owned by Fujian Chuangke Tech. Co., which is a subsidiary of Beijing Bitmain Technology and mainly responsible for mining farm operation of Bitmain. And Zhan is currently the legal person of Beijing Bitmain.
In response, Zhan issued a statement via Bitmain’s Weibo account claiming that it was Wu who “illegally transferred” the mining machines to a company under his control, and that Zhan has got back over 6,100 units of mining rigs in obedience to the law.
Clients’ interest damaged
This latest twist in the power struggle has further damaged the interests of Bitmain’s clients and the company’s image after the June shipment delay incident, as many of the 10k mining machines involving in the “illegal transfer” are hosted in the farm or rented for cloud mining.
It brings up the problem that which side would be responsible for the resulting losses of clients, meanwhile, which side would own the Antminer brand and be responsible for the shipment and other related services.
Currently, the Antminer related official social media accounts are under the control of Wu’s side. Public records show that an effective Antminer trademark has at least been registered in mainland China and Hong Kong, both filed and owned by Bitmain’s Singapore entity called Bitmaintech Pte.
Bitmaintech Pte is in parallel with Bitmain Technologies Limited, which is registered in Hong Kong. The two are both direct subsidiaries of BitMain Technologies Holding, the ultimate parent holding group incorporated in the Cayman Islands that controls all Bitmain entities, according to a Coindesk report.
Hard fork of Bitmain
After being ousted last October, Micree Zhan, as the largest shareholder of Bitmain, made his comeback in June after winning favor from Chinese authorities. In early May, authorities granted him control of Beijing Bitmain Technology, the long-standing operational entity of Bitmain.
In retaliation move, on May 26, Wu registered a new company called Beijing Guiyuan Dalu, a counterpart of Zhan’s Beijing Bitmain, and had been trying to transfer the contracts of employees on his side to the new company.
After taking over the Beijing Bitmain office, Zhan also regained control of the Shenzhen factory which controls mining machine shipments. The furious Zhan took revenge on Wu by forbidding shipment of mining devices to customers who paid their pre-orders to bank accounts controlled by Wu’s side.
Since then, the two have been operating their own entities and in a war of words accusing the other of the illegal entity.
The fight seemed to ease off when a statement released by Antminer’s WeChat account on June 23 showed that the two founders of Bitmain seemed to come to a temporary compromise after realizing their infighting has hurt clients. As Wu has capital and chip supplier at hand and Zhan controls the factory in Shenzhen, it needs the cooperation of both sides to make miners once the company’s mining machines in stock is exhausted.
However, further negotiations seemed to have broken down, as the aforementioned statement was soon deleted and the Bitmain drama continues as we’ve seen.