Velo Labs is building out the biggest payment network in Southeast Asia to improve remittance and money transfer markets. As some may know, today’s remittance system involves hurdles of middlemen who each charge high fees. This makes remittance extremely expensive and slow.
Velo Labs is solving this problem by allowing people to transfer value between each other in a timely and transparent manner without middlemen using digital credits that are pegged to any currency and are collateralized by a cryptocurrency (VELO) issued on Stellar.
What initially got me to look deeper into Velo Labs was their company’s backing. It’s founded by Chatchaval Jiaravanon. This may not be a household name to most, but he is a prominent entrepreneur in Asia. He sits on the board of lots of corporations including True Corporation, the leading Telecom Group in Thailand, and owns Fortune Magazine. His family also owns the CP Group: the largest conglomerate in Thailand.
The CP Group is also Velo Lab’s largest backer. The company owns all the 7-Elevens (over 20,000!) in Thailand and is one of the largest conglomerates in the world.
Recently we spoke to Mr. Gaurang Desai on the Velo Economics team about how remittance currently works in Southeast Asia
Below are some key points we covered in the interview:
Problems with the existing international remittance system in Southeast Asia
How Velo Labs fits into the current system
The advantages of the Velo Protocol over current remittance methods
What makes the Velo Protocol different from competing protocols
How many money transfer operators and agents are currently on the network
Velo Labs is hosting an AMA on Stellar’s subreddit on August 7th. So feel free to ask Mr. Michael Cowans, Velo Lab’s Commercial Advisor
I’ll keep this week’s newsletter short and sweet. Primary markets (BTC, ETC) have been relatively stable, which an overall trend of recovery after last week’s flash crash on the 2nd of Aug. The crash was primarily targeted at leveraged traders, with over $1 Billion USD worth of contracts being liquidated across multiple exchanges. After this crash, prices quickly recovered nearing previous highs. This goes to show one of the dangers of over-leveraged positions, as there can be sudden volatility in either direction causing positions to be liquidated.
Yield farming is HOT, but farmers Beware!
Personally, I’ve been yield farming quite a lot this week with generally favorable results. Please note that Yield Farming is EXTREMELY dangerous as it involves the use of potentially unverified audited code on smart contracts. Do Your Own Research (honestly this is what’s taking up most of my time)
Starting off, Yearn’s developer Andre Cronje (check this interview summary) launched Yvaults 2. Simply funds saved there will automatically be invested into the best strategy possible to generate more profit. The new system allows for the addition of new strategies too – basically what the founder Andre sees fit. Annual returns can vary – we’ve seen numbers between 50% and 200% APY. However, there isn’t a good way to calculate for the time being.
One of the biggest trends this week is the emergence of $YFI clones. $YFI farming was extremely popular 2 weeks ago as it has extremely high yields. However – this has since paused as there is no new distribution of $YFI. Many opportunistic developers sought to create forks for $YFI that would distribute new coins such as $YFII, $YFFI, $YFT, and $WIFEY (just to name a few) in a similar fashion. One of the biggest risks with these $YFI clones is that the use un-audited code – so they are extremely vulnerable to smart contract bugs (such as this one https://twitter.com/oli_vdb/status/1290370855709573122 ).
BEWARE: $ASUKA & YYFI exit scams
Two infamous projects pulled of exit scams in the past month, with developers minting a huge number of tokens and trading it into DAI. Both $ASUKA and $YYFI preyed on farmers who added liquidity to balancer pools that are required to farm the tokens. These pools are dangerous because the funds are directly used as a counter-party to trades, meaning that the pool’s DAI will directly be used to buy up the corresponding token. The $YFFI developer minted 1,000,000 $YFFI and sold it immediately, making off with $70,000 in the process (could have been more if he understood how balancer works).
For the time being, I’m staying away from any yield farming involves liquidity pools.
CREAM
This week I’m testing out CREAM mining. CREAM is a project inspired by Compound and they are offering airdrops of CREAM token to those supply / borrowing from the protocol. Currently, the project’s code is up on GitHub but is pending formal audits. This means there will be potential smart contract risks with farming here.
I’ll be interviewing CZ, Founder and CEO of Binance LIVE on 12th August 2020 at 3:00am (UTC)!
In the interview we will be discussing:
DeFi Mania – Is Binance going to go big on Decentralised Finance (DeFi)?
What can we expect from Binance in 2020?
Upcoming giveaways on the Exchange!?
What is Binance?Binance was established in 2017 and is BY FAR the world’s leading cryptocurrency exchange with more than USD $3 million being traded on the Exchange every 24 hours. The Exchange offers trading in 201 coins and 637 trading pairs. The Exchange also has its native token $BNB which consistently ranks within the top 10 of all cryptocurrencies based on market capitalization.
The huge success of Binance also means that CZ himself is hugely well-known in the cryptocurrency scene and beyond, having been featured on the cover of Time Magazine as going from zero to billionaire in only 6 months, and is extremely active on Twitter with over 540,000 followers.
This video is aimed at all levels of cryptocurrency enthusiasts so feel free to ask CZ your burning questions about DeFi, cryptocurrency projects, exchanges, and this space in general. I’ll personally be giving out prizes for:
Most Creative Question;
Most Insightful Question; and
Funniest / Weirdest Question.
To ask a question, leave a comment in this post below!
Congratulations Everyone – You’re officially a founding member of this Newsletter! We’ve already doubled our subscriptions in the past week due to increased interest (WOOT). At the same time, crypto is moving at light speed – with new projects getting created, traded, and listed on top exchanges in the space of 2-3 days. Here’s a rundown of all that’s happening:
Post-Bitcoin Rally
Bitcoin made some major moves on Monday, shooting up all the way to $11,000 after a long dormant period. Initially, this shocked many traders, with many scrambling and selling their altcoins to jump on the Bitcoin train. FOMO is the name of the game these days, and many were hoping Bitcoin would shoot as high up as $14,000 / $17,000. However, Bitcoin didn’t go there – instead she seemed to settle down at $11,000 without much volatility. With the big cat sleeping, the mice (altcoins) are out to play. We’ve seen some insane rallies for YFI (+225%), Elrond(+65%), and UMA (+60%) this week.
Yield Farming After $YFI blew up last week, yield farming is front and center on everyone’s discussion table. We covered YFI both on our website https://boxmining.com/yfi-yield-farming/ and in a video https://www.youtube.com/watch?v=eoz9CnX-52s. In a quick summary, liquidity mining is essentially saving money in different liquidity pools. Miners will then be rewarded with token distributions (such as YFI) that can yield up to 1000% APR. Obviously, with such rewards, it’s highly risky and experimental. We definitely recommend that you check out the video and Do Your Own Research (DYOR). Currently, YFI yield farming is taking a pause as a new contract is being deployed.
YFII Launches Nope, that’s not a typo. A new project called YFII has launched – forking the YFI project and allowing yield farmers to earn the YFII token. What’s unique about this project is that it distributes YFII tokens with a weekly “halving”, similar to Bitcoin. The release of this project comes at a very convenient time as $YFI mining is currently taking a break, so farmers are left with yCurve tokens wondering what to do. YFII allows the staking of yCurve tokens in a similar fashion and UI to $YFI (it is a fork after all) This is highly controversial due to it’s rushed nature of its release, with metamask, balancer, and etherscan users quickly flagging the project as a “Scam”. This is due to two reasons, as there was an initial “owner key” for YFII which allowed the owner to create infinite tokens. However, recently this key has been destroyed. This means it’s not really a “scam”, and the community for YFII is currently building up.
Zeus Capital Vs Linkchain Recently Zeus Capital has taken up a major campaign against Chainlink (LINK) calling it a “scam” and giving a valuation of $0.07 (1% of its current value). Not only have they released a long report, but recently they have been caught paying influencers to make negative price charts on LINK. It’s clear they have taken up a massive short position and will benefit from LINK’s price going down. I find this a more mature version of the FUD and HYPE cycles we experience in crypto – and highlights the importance of DYOR – you need to be prepared for both hype and FUD.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. (https://www.adarsus.com/) Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
I’ll be interviewing Bobby Ong, Co-Founder and COO of Coingecko this week!
In the interview we will be discussing:
DeFi Wave – Is Coingecko going big on DeFi?
Cleaning up fake volumes on exchanges – How do we identify fake volumes in the exchange space?
Coingecko research – what are they finding with recent trading trends?
What is Coingecko?Coingecko was launched in 2014 and is one of the world’s leading cryptocurrency data aggregator and tracking over 7,000 different cryptocurrencies. Coingecko also provides distinctive metrics such as user scores which survey users’ outlook on the coin. (Ativan) Another distinctive metric is “Trust Score”- Coingecko’s rating algorithm which holistically ranks a cryptocurrency exchange based on factors such as liquidity, trading activity, cybersecurity etc. so as to combat fake exchange volume data.
This video is aimed at all levels of cryptocurrency enthusiasts so feel free to ask Bobby your burning questions about DeFi, cryptocurrency projects, exchanges and this space in general. I’ll personally be giving out prizes for:
Most Creative Question;
Most Insightful Question; and
Funniest / Weirdest Question.
To ask a question, leave a comment in this post below!
China’s hotly-anticipated nationwide effort to integrate blockchains – the Blockchain Service Network (BSN) – has split into two entities over a disagreement to integrate public blockchains. BSN will now be split into two separate entities:
BSN-China: a private consortium led by the State Information Center. This chain will be China’s core chain with support from the Government. BSN-China will consist of nodes that fully comply with local Chinese laws and regulations
BSN-International: A public consortium led by Red Date Technologies. This chain will allow international co-operation and integration of crypto protocols such as Ethereum (ETH), EOS (EOS), Nervos (CKB), NEO (NEO), Chainlink (LINK) and Tezos (XTZ)
BSN was originally envisioned as a project that would allow any blockchain, be it public chains (eg. Ethereum (ETH)) or corporate private chains to communicate with each other. Following the original plan, any public blockchain can integrate itself into the BSN, a network that will help cross-chain communication and value transfer.
Recently there has been pushback against the use of Public blockchains in China, as it would mean the State would not be able to control these Chains. As a result, the incorporation of public chains into BSN has been a hotly contested subject as the state would not be able to ensure that all aspects of the chain will comply with local laws. In fact, public blockchains are decentralized meaning that they are immune to centralized control and governance. This has lead to the State declining to allow any public blockchains into BSN-China.
It is expected that BSN-China will receive most of the state’s attention and funding. Private projects developed by major tech giants in China, such as Tencent and Baidu are expected to be integrated into BSN-China. This will be the major spearhead develop for China’s nationwide push for blockchain development.
Will Decentralized Protocols be left out?
International efforts to develop and integrate into BSN-International will be expected to continue ahead as planned. Original creators of BSN, Red Date Technologies, will spearhead the development and continue to push the international effort to create a communication network for the entire blockchain ecosystem.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Hey Vefam! I’ll be interviewing Vechain CEO Sunny Lu at 10 pm UTC +8 on Monday the 20th of July. The aim of the interview is to give an updated view of Vechain and the grand objectives. Then we’ll go into the details and ask about developments with various programs such as previous partnerships, Toolchain, and the entire ecosystem.
What is Vechain? VeChain (or VechainThor) is a next-generation smart contract blockchain platform focused on enterprise adoption, Internet of Things (IoT), and mass adoption via Toolchain. The blockchain supports the creation of smart-contracts – self-executing contacts that have a guaranteed outcome without third party trust. This allows for the creation of decentralized applications (“Dapps”) that can solve enterprise problems such as:
*Update: Due to popular demand, Sunny has agreed to do the interview LIVE. Event will be held at 10 pm UTC +8 on Monday the 20th of July on the following stream:
Overall the video is for both beginners and veterans of the Vechain Ecosystem. I’d love for you guys to come up with some questions for Sunny as well. I’ll personally be giving some prizes for:
To ask a question, leave a comment in this post below!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange. (https://www.focolare.org)
What’s are Bitcoin Over-the-Counter (OTC) brokers?
Over-the-counter (OTC) are entities that allow the buy and sell of large quantities of Bitcoin and other cryptocurrencies. OTCs offer more private and personalized services to institutions and high net-worth individuals who need a high degree of liquidity and privacy. The key advantage to an OTC is that they handle large trading volumes, such as trading $100,000+ USD without price slippage. OTC traders will normally quote a strike price for the entire order block with immediate execution. This is contrasted with trading on cryptocurrency exchanges where large orders will cause the price to decrease due to a lack of buy orders. OTC desks allows institutions and high net-worth individuals to buy Bitcoin without a having dedicated trading desk.
OTC offices can be either regionally located, serving local clients or global. Often major cities such as Hong Kong, Tokyo or New York have OTC brokers servicing local clients. These brokers can provide very personalized services and even in person meetups. In contrast, global OTCs such as Binance OTC handles transactions over the internet.
Traditionally in the stock market world, OTC desks facilitate trading of securities that are not listed on formal exchanges, e.g. the New York Stock Exchange.
Benefits of trading via an OTC broker
High Liquidity – Dedicated traders from OTC desks will help increase the liquidity of the overall market. This means they can handle large order blocks
Fixed Price – OTC brokers will over a quotation for the entire order block. This means orders are not affected by price slippage.
Easy Fiat Options – Brokers will have local bank accounts and can sometimes even accept cash.
Disadvantages of trading via an OTC broker
Limited range of cryptocurrencies – Often OTC brokers specialize on a few cryptocurrencies. This means unlike exchanges, they will not offer 100+ trading pairs. Instead, they will focus on the major popular cryptocurrencies that have high trading volune and interest such as Bitcoin, Ethereum or some stablecoins.
Manual trading process – Traders are executed by a human counter-party. This trading times will often be limited to regular office hours.
Large order size required – Brokers often have a minimum order size, such as $100,000 USD traded within a certain period of time.
How do OTC Brokers work
OTC desks have a network of buyers and sellers. The trades themselves are facilitated by OTC broker-dealer who will locate and negotiate directly with prospective buyers and sellers over computer networks or by phone. This is contrasted from trading over exchanges where the prices and order books are publicly available. For OTC desks, their broker-dealers will negotiate the trade price for you. Trades are also not publicly listed giving the parties privacy.
Therefore, to fully understand what is going on in the cryptocurrency markets it is important to consider what is also happening at OTC desks. This is because large transactions happen on them on a daily basis.
Bitcoin OTC vs Exchanges
The choice of whether to use a Bitcoin OTC or Exchange depends largely on the volume of orders. Big players looking to buy or sell large quantities of cryptocurrencies are better off using an OTC broker. This is because a single exchange (no matter how large) will not have the liquidity necessary to fill large order blocks. Research has shown that sell orders of US$30 million can significantly suppress the price of a cryptocurrency, hence causing slippages of 5-10%. This amount is much larger than the fees charged by OTC brokers. The second advantage of using OTCs is that they can offer to lock in a particular quotation with the option to settle at a later time. This gives people additional flexibility to move funds from banks or cold-storage (such as the Ledger Nano X).
However, depending on who you are, one upside or downside of OTCs is that they are not transparent. So while you can try to gauge whether there is a lot of trade flow through an OTC desk by reading their reports (if any), there is no way you can verify if they are being truthful or giving you the best price. On the other hand you can conduct trades privately compared to on exchanges and the price will be “locked-in” and not subject to any fluctuation between the time of agreement and the time of settlement.
How to trade Bitcoin with OTC Brokers
This guide outlines the general steps involved in trading with Over-the-Counter Brokers. Generally speaking, brokers provide similar on-boarding and trading experiences. It is important to remember all brokers will require verification of your identity, known as Know-Your-Customer (KYC) registration. On top of this, brokers will verify the source of funds to prevent money-laundering.
Summary of how crypto is traded with an OTC broker (Image credit: Genesis Block)
Time needed: 3 days
How to trade with Bitcoin OTC Brokers
Signup
Sign up to the broker via website, email, call or in-person meetup. They will usually ask about the type and quantity of cryptocurrencies you would like to sell.
Onboard
Every broker will require you to fill in onboarding documents and legal disclaimers. They will also ask you to provide various types of documentation such as a Government ID, Proof of Residence and Proof of Income.
Communicate
Once on-boarded, they will give you a communications channel. Typically this involved a messaging platform where you can request quotations for orders such as: You: “I would like to buy 100 Bitcoin” Trader: “We can offer 100 BTC at a price of $8123 USD per BTC”
Confirm trade
You can choose whether to accept the price quotation or not. If you agree, the trade is immediately confirmed and the trade will provide you with a deposit address.
Trade Complete
Once the deposit is received, the order is no fully executed and you will receive your trade
Top OTC Brokers around the world
When trading with OTC brokers, it’s important to only use trusted and regulated brokers. This is important because of the large transaction sizes involved – you don’t want to get delayed or even scammed out of a transactions. We compiled the list of the biggest OTC brokers around the world
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Bitcoin OTC in China and Hong Kong
Bitcoin OTC brokers play a very important role in China due to a government ban on cryptocurrency exchanges. In China, it’s no longer legal to operate a cryptocurrency exchange due to a legislation change in 2017. This has left large Chinese exchanges and OTC desks such as OKex, Binance, Genesis Block and Huobi operating overseas or as OTC brokers.
Currently Bitcoin OTCs brokers are legal in China. They operate by directly connecting buyers and sellers of Bitcoin. However, Chinese financial institutions such as Alibaba’s Alipay have distanced themselves from OTC transactions, stating that they will “immediately stop relevant payment services“.
There’re several reports about @Alipay being used for bitcoin transactions. To reiterate, Alipay closely monitors over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations. If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services.
One of the biggest concerns of OTC brokers and trading is the risk of exposure to criminal funds. This is because OTC desks who do not perform proper due diligence on source of funds can come into contact with tainted coins. In a 2020 report, cryptocurrency research company Chainalysis released a report on money laundering in the exchange and OTC space. The report accused some OTC desks of illegally taking laundering funds for private clients. In order to protect yourself from such activity, ensure you are trading with legitimate brokers who have proper KYC. On top of this, never buy “discounted” Bitcoins offered on social media such as Instagram or Facebook.
Frequently Asked Questions (FAQ)
Will OTC brokers accept cash?
Often OTC brokers will have a cash option – for both buying and selling Bitcoin. It’s important to remember for large quantities of cash, KYC registration is required. On top of this, proof of funds may also be requested.
Do OTC brokers require my Identity?
To comply with anti-money laundering laws, OTC brokers will require you to submit official documentation such as Identity, Proof of address, bank account statements, proof of income or proof of funds. The type of identification required however would depend on the OTC brokers own company requirements and any information as required by the laws of the relevant jurisdiction.
Is there a limit on how much cryptocurrency I can trade with an OTC?
ost OTCs do not have a maximum limit on the amount of Bitcoin you can buy or sell. Order sizes of 100 or above BTC are commonplace for these brokers. However, some brokers will have a minimum order size, such as $100,000 USD.
How do I buy Bitcoin Anonymously (Privately)?
The best way to buy Bitcoin without a record is via cash or peer-to-peer transactions. It is important to remember this contains inherent risk as you’ll need to do your own KYC and potentially offer proof of funds in the future. You should also check that your counterparty is a legitimate trader and not a scammer as there are incidents of people being robbed during these “trades”.
Are there OTCs for Altcoins?
There are OTC services for altcoins and even coins that are not yet listed on exchanges. These OTCs will function similar to a matchmaker – matching sellers and buyers of a particular asset. One such example is Silverway – an OTC deal platform and deal aggregation platform.
How do I find out the volumes handled by OTCs?
OTCs are not obliged to provide trading data such as daily volumes, prices, or order books. However, some OTCs provide annual reports or blog posts that contain aggregated volume data.
What should I look out for when choosing OTCs?
Security and legitimacy are very important with thinking of which OTC desk to trade with, especially since huge sums of money are involved. Prospective customers could for example, check if the OTC desk is registered with the relevant government authorities, ask any peers if they have traded there before and their feedback, check online reviews or social media, or even go to their physical offices to make inquiries before signing up and trading.
Free TON (The Open Network) is a new blockchain platform created by the developers of the Telegram Open Network (also abbreviated TON). FREE TON positions itself as a community project which uses the telegram developed open source “TON OS” as virtual Operating System to run smart contracts and decentralized applications. Despite the name, Free TON is not officially affiliated with Telegram Inc nor are there any claims that it will be incorporated in the Telegram App. The project also doesn’t include Telegram CEO Pavel Durov, which is very likely an intentional move to distance themselves from the Telegram Open Network.
Telegram Open Network is officially delayed until 2021
Free TON is based on TON OS
TON OS is designed as a decentralized operating system to handle decentralized applications. One way to imagine it is that it’s a more full-featured than the Ethereum Virtual Machine which only strictly run code. TON OS has a stack of components which can be used by developers to create powerful applications without the need to
Built on Open Sourced Components
Free TON is built on components that were open sourced this week. These components were originally part of the Telegram Open Network project developed by TON labs and other parties. By making these components Open Source, everyone around the can view and copy fragments of the code.
Distribution of TONs
Free TON will be distributed via “Giver Contracts” who are responsible for distributing TONs to 3 major groups:
Users
Validators
Developers
Referral Giver be responsible for airdropping coins to initial users via a referral program. This will be the largest group, and Referral Givers will give away 85% of all TONs.
Free TON Roadmap
Stage I ”Raging Bull” — Incentivized Beta Network with a Decentralized Time Bomb (DTB)
Stage II ”Rumble Fish” — Incentivized Beta Network with validator voting for Network Configuration
Stage III “Fight Club” — Decentralized Main Network, at the point where decentralization is sufficiently achieved
TON Crystal exchange listing
The TON crystal is the official currency of Free TON. This currency will be used to power transactions on the network (similar to Ethereum Gas) and also used native currency on the network. Currently it’s unknown if there will be any regulatory issues with listing Free TON. (Tramadol) Whilst we know developed by a similar developer pool as the TON project, it’s unknown if it will carry over any of the legal issues.
Community is not accepting US members
The Free TON community has a strong “No US resident” policy, where US residents cannot participate in the community nor receive any free tokens. This is likely related to the on-going legal issues between Telegram Open Network and the US SEC – where a pending lawsuit and investigation is preventing the coin from being launched. Very likely the developers behind Free TON has learnt from the previous mistakes and decided not to include US residents in any form.
Conclusion
Free TON is everything Telegram Open Network would be – but without Telegram. The community project aims at creating a decentralized network using all the research and development which went into the original TON (a project that was canceled due to regulatory issues).
How do I get Free TON
Users will get distributed Free TON via the Referral Giver method. 85% of all TON will be given away by this method
How do I mine TON
You cannot mine TON as it’s not using the Proof of Work consensus. Instead, there are 300 public validators that will be able to earn TON
Bitmain, the world’s leading cryptocurrency mining company, has seen a huge $300 million profit in its first four months of 2020. This greatly alleviates fears of a “collapse” in the Bitcoin mining industry caused by the Bitcoin Halving – which effectively reduced miner’s revenue by half. Bitcoin mining is a multi-billion dollar industry and is set to be one of the most profitable sectors in the cryptocurrency space. Find out more about Bitcoin mining in our guide.
In an Industry blog, Wu Said Blockchain, first reported the news after Bitmain told their staff internally of the around $300 million profit. As a reward for their hard work, Bitmain employees received big Labour Day bonuses totaling 7,000 Yuan (around $9,900).
Quite what prompted these gains was not revealed but the reports suggested that a large part came from ventures not pertaining to cryptocurrency mining. The main area is in Artificial Intelligence (AI), a field they entered in 2018.
Since then, Bitmain’s AIs growth has been fast and they have launched chip designs that companies can use to power their AI systems and software. The blog post mentioned a large order of their AI chip BM1684 which was said to be worth “millions” and seemed to suggest it could account for the large profit windfall.
That is not to say that Bitcoin mining has taken a back seat. Bitmain has also opened four new mining farms and has seen a hash rate increase in its other pools. However, the headlines following Bitmain in recent times had painted a vastly different picture of life inside the company and its economic health.
Bitmain’s Losses and Internal Disputes
Earlier this year, reports came out claiming Bitmain was in serious strife and were set to lay off 50% of their staff amid concerns about Bitcoin’s May halving. The company had already cut staff in 2018 and with market share decline evident in 2019 many felt Bitmain would become a tragedy of the “crypto winter”. Performance problems from their mining rigs, like the Bitmain S17/T17 Antminer, only seemed to compound their issues.
The most notable problem though was Bitmain’s internal conflicts between the top tier staff. The two founders and CEOs of the company, Jihan Wu and Micree Ketuan Zhan have been at loggerheads for months.
Leaks in early 2019 had suggested Jihan Wu was set to give up his CEO position and take a limited role in the company. Yet, in October 2019 Wu made the shocking decision of ousting his longtime partner Zhan, who was Chairman of Bitmain at the time. In an email to staff, Wu told his employees to cease all contact with Zhan and that he was back to save the company.
Zhan has filed two lawsuits against Bitmain and the AI subsidiary, which is called Fujian Zhanhua Intelligence Technologies. The disgruntled former senior executive is looking for a way back into Bitmain and released a statement saying: “I will fight for her [Bitmain] till the end with legal weapons. I won’t allow those who want to plot against Bitmain to succeed. If someone wants a war, we will give them one.”
The case continues but for now it would seem that Wu has the upper hand, especially with business doing so well at Bitmain.
