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The redundancies in progress at the crypto-mega-company Bitmain could start a new wave of sales in the Bitcoin Cash and Litecoin markets, according to the well-known cryptographic investor Kyle Samani.
The venture capitalist focused on cryptocurrency said in a tweet that the mining giant of Bitcoin is – if the rumors are true – run out of cash to continue its operations through mining development and blockchain. The scarcity of financial resources has led the Chinese company to downsize its workforce, according to estimates of 50% or more. And to further fulfill his goals, Samani said Bitmain will probably unload his encrypted stock, which includes a huge number of Litecoin and Bitcoin cash tokens.
This is extremely bearish for BCH and LTC
The only reason to make such drastic cuts is because you're running out of money
In the meantime, they still have 1 BCH and 1M LTC on their balance sheet. These will soon be liquidated to keep the lights on https://t.co/kneSRcK2li
– Kyle Samani (@KyleSamani) December 26, 2018
A financial report leaked
Samani's bearish theory is based on the allegedly Bitmain financial report, which was leaked in August of this year. If genuine, it revealed that the company held nearly 931,000 Litecoin (LTC) and 1 million Bitcoin Cash (BCH). According to current rates, Bitmain must hold approximately $ 28.6 million in LTC and $ 177 million in BCH. The company, until the time of writing, did not verify the financial document leaked.
The leaked document also shows Bitcoin, Dash and Ethereum as part of Bitmain's portfolio, with a value close to $ 84 million, $ 26 million and $ 142,000, respectively. Combined, Bitmain has a value of $ 316 million of cryptocurrency reserves, provided that the company has never downloaded even the smallest part since August.
Bitcoin Cash Under Spotlight
According to the reports, Bitmain fired the entire Copernicus team that was working on the development of a new Bitcoin Cash client. The move comes after the mining giant has backed Roger Ver-alllied Cashco's ABC to fight a costly hash war against his bifurcated cousin, Bitcoin SV. Although not confirmed by Bitmain, the allocation of large amounts of computing power to assist the BCH network could have led the company to face millions of dollars of monetary damages. Furthermore, the Bitcoin Cash token value has fallen by over 60% since the start of the November Hash war.
BCTKING555, a Twitter account that primarily publishes negative reports and rumors about Bitmain, said the company had privately recorded losses of $ 740 million in the third quarter, which did not even include the damage incurred during the Bitcoin Cash forks. Citing the data available to the public, BitMike Research also estimated that Bitmain would probably have recorded significant losses in the second quarter after a successful first quarter.
We have lost Bitmain Q3 numbers! COMPLETE DISASTER. The company lost $ 740 million including losses on inventory and bitcoin money! And this is not the accounting for the hash war costs! #bitmainipo @HKEXGroup
– BTCKING555 (@ btcking555) December 4, 2018
The events could put Bitcoin Cash in the bearish spotlight, suggesting that retail investors would be less likely to find the project stable.
Where is Bitmain's IPO?
The redundancies of Bitmain could stabilize its outflows against losses reported in the short term. In addition, the company has requested approval to hold a historic IPO in Hong Kong. However, recent reports indicate that the HKEX regulators are not satisfied with the status of the crypto industry. Thus, some believe that HKEX may reject the IPO for the support of a product that they believe is too nascent.
With all the doors closed, the next step for Bitmain could be to reach venture capitalists for additional funds or, as envisaged by Samani, sell some of their digital assets. The company still maintains over 60% of the total crypto-mining market.
Featured image of CoinGeek / YouTube
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