The Startups In Crypto World Are Forced To Cut Back As Bitcoin Sinks.
What is happening in the cryptocurrency world? Why are the companies laying off employees? Is the Bitcoin price sinking?
Why Is The Bitcoin Sinking?
The price of Bitcoin had hit an all-time high earlier with nearly $20,000. While most of the cryptocurrency enthusiasts were boasting about the wealth everywhere the initial coin offering’s exploded as startups continued to pull in record amounts of the venture capital. Moving forward, this year Bitcoin is down 75 percent hitting a meager $3,700 as sinking as quickly as its meteoric rise with industry startups paying the price.
To note that the latest victim is Bitmain, which is a provider of Bitcoin mining hardware that submitted its IPO prospectus very recently to the Stock Exchange of HongKong. With cutbacks beginning imminently the company confirmed to CoinDesk that there has been a certain amount of adjustment to the staff this year continuing to build a long term sustainable and scalable business according to a spokesperson for Bitmain. Further, they added a part of that is having to focus on things that are core to that mission whereas the things are not auxiliary.
Clarifying the Beijing based Bitmain says that how many of its employees will be impacted though rumors are going around that Bitmain has since denied on Maimai that is a Chinese LinkedIn like platform suggesting as many as 50 percents of the company’s headcount could be laid off. As the news is coming after the crypto giant confirmed it has shuttered its Israeli development center, Bitmaintech Israel that has laid off 23 employees in the process. As the company’s growth has skyrocketed, Bitmain employs at least 2,000 people up from 250 in 2016 according to PitchBook.
As quoted to be saying, Bitmaintech Israel’s head Gadi Glikberg told his employees at the time of layoffs that the crypto market has undergone a shakeup in the past few months forcing Bitmain to examine the various activities around the globe refocusing its business following the current situation.
In the event of raising more than $800 million that comes in venture capital funding from Sequoia, Coatue Management, Softbank and more Bitmain stands at a valuation of $12billion quickly soaring to become the most valuable crypto startup in the world surpassing Coinbase that has itself garnered an $ 8 billion valuation this fall.
Bitmain reported more than $ 2.5 billion in revenue in the IPO filing, which is up nearly 10x on the $ 278 million claimed for 2016 while for the first half of 2018, Bitmain surpassed $ 2.8billion in revenue. While these are surely astonishing numbers, whether Bitmain can surely sustain this kind of momentum has been called into question. Just as it gears up to go public, where it would be the largest crypto-related IPO to date. By nature even though the crypto market is unpredictable there is a characteristic that is less than favorable to public market investors.
Startups sacrifice staff
It is true that meanwhile Huobi group which is a trading platform headquartered in Beijing, were laying off a portion of its 1000 employees which are according to a report from the South China Morning Post. Backed by Sequoia, and ZhenFund Huobi didn’t immediately respond to a request for comment. The Brooklyn based ConsenSys earlier confirmed that it was laying off 13 percent of the 1200 person staff where the company active in the crypto ecosystem incubates and invests in decentralized applications built on Ethereum blockchain.
As the ConsenSys founder and crypto billionaire Joseph Lubin states in a letter to employees regarding the layoffs, they are excited about ConsenSys 2.0 as the first step in this direction that has been a difficult one where they are streamlining several parts of the business including ConsenSys Solutions, spokes and hub services which are combined to lead to a 13% reduction of mesh members.
To account for it finally, Steemit which is a distributed app designed to reward content creators, laid off nearly 70percent of the staff just a day earlier citing poor market conditions. According to founder and chief executive officer Ned Scott, he wrote in a statement that they believed that Steemit is by far the best and lowest cost blockchain protocol for applications as the improvements result from this new direction making it far better for application sustainability. Continuing he stated that to ensure that they continue to improve Steem, there is a need to first get costs under control remaining economically sustainable where there’s nothing more now that to survive keeping Steemit.com operating and keeping the mission alive making great communities.
The Final Words
While it has been watching downsizing following periods of rapid growth there are many crypto startups experienced during the Bitcoin boom that is only natural whereas can these businesses continue enduring periods of extreme volatility without crashing completely. Whereas one thing is certain that in case the price of Bitcoin sinks, further and further these staff adjustments at crypto startups large and small will be unavoidable.