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Crypto Miners Allege Chinese Bitcoin Mining Giant Delivered "Defective" Product

Ahead of Bitcoin’s much-awaited halving event on May 12, a group of miners alleged Bitmain’s latest “Antminer” deliveries were defective and led to losses for investors.

Bitmain runs into trouble

Arseniy Grusha, head of US-based mining firm Wattum, noted multiple issues with the February batch of purchased Antminers, as per a LinkedIn post on May 4. One in three units were found “defective” – with 32 units returning software errors and 99 units working on just single “hash boards.”

Grusha later explained in a chat group with his followers, that he had purchased over 400 Antminer S17+ miners from Bitmain in February 2020, after an initial month-long delay due to the ongoing pandemic at the time. But one month into operation, 30 percent of the mining machines threw up various hardware and software glitches. Some sixty units did not work “straight out of the box.”

The entrepreneur noted a “defect rate” of up to 5 percent of the total order is accepted and even expected in the mining business. However, such a botched order has never occurred previously.

Woes just before halving

Grusha’s woes come right before Bitcoin’s halving event on May 12, with the entrepreneur presumably losing a significant amount of money in block rewards. On the Telegram group, he confirmed sending a mail to Bitmain requesting repair of defective units and a possible refund.

At the time of writing, the Telegram group has over 170 members, most of them miners who faced similar issues. Mike Hamilton of mining startup Griid placed a mammoth order of 1800 mining units, noting over 700 machines had “at least one hash board down” after three months.

Chris Wallin, whose company was not disclosed, indicated all 26 ordered units operated at 500 Th/s, less than half of the required 1900 Th/s to mine Bitcoin. Husam Wadi, another miner who faced burnt hash board issues, said: “This is the last time I am buying from Bitmain.”

Despite the troubles, Bitmain posted impressive revenues for Q1 of 2020. As Blockchain.News reported earlier, the mining giant earned over $300 million this year, with growth in both its bitcoin mining and A.I-centric businesses.

Image via Shutterstock

Bitmain Launches Cheaper Mining Machines After Bitcoin Halving and Losing Market Share to MicroBT

Bitmain has launched a cheaper version of a Bitcoin mining machine, Antminer T19, compared to its more pricy predecessor Antminer S19.

Bitmain has been losing its market share to its rival, MicroBT, which launched its M30S++ Bitcoin miner in April this year.

The Antminer T19 has a hashrate/ mining power of 84 terahash per second (TH/s), and power efficiency of 37.5 joules per terahash (J/TH). The price of this new mining machine is around $1750, while the S19 costs around $1785.

According to F2Pool, the new mining model can generate a profit of around $3.14 per day, while the S19 could generate around $3.95 per day.

Manufacturing delays have been caused by the coronavirus outbreak, causing a reduction in growth in Bitcoin’s computing power. Bitmain has been dominating the cryptocurrency mining hardware industry since 2017, and has even tried to file an IPO with the Securities and Exchange Commission (SEC) in the United States.

Canaan Creative, another Bitcoin mining titan, as well as Bitmain have failed during the crypto winter in 2018 to conduct the offering. However, Bitmain has discreetly filed an application with the US SEC in late 2019, and anonymous informed sources according to a Tencent report has revealed that Deutsche Bank may have been sponsoring the application.

Bitcoin halving

The latest Bitcoin halving took place in May 2020. Each time Bitcoin halving takes place, the number of Bitcoins entering circulation every 10 minutes, also known as block rewards, will fall to half, to 6.25 from 12.5 in May.

As the amount of supply of the crypto is decreasing, the demand most likely will stay the same, but possibly lead to an increase in Bitcoin’s price. Experts believe that there will be less Bitcoin available in the market if the miners will be selling less of the cryptocurrency.

MicroBT CEO alleged dispute with Bitmain

The Chinese Police have just resumed its investigation of intellectual property infringement involving Yang Zuoxing, CEO of Shenzhen Bit Microelectronics Technology, and Bitmain.

In the course, Yang was being arrested to help in the investigation of the patent of Bitmain he allegedly infringed upon and if found guilty, would be sentenced to prison.

The news about his arrest was revealed by insiders who were around when the police took hold of him on the basis of intellectual disputes in Bitmain.

Yang was once staff in the company; working as the director of processor design, he developed the Antminer S7 and S9 models. However, Yang exited the company when the talk over equity stake was a debacle.

Following from this, Bitmain took MicroBT to court alleging that Yang has infringed upon their patent.

Image via Shutterstock

Bitmain Business Booming Despite Public Feud Between Co-Founders Jihan Wu and Micree Ketuan Zhan

Mining giant Bitmain continues to accelerate—signing a new $23 million Antminer S19 Pro Contract with Marathon Patent Group—despite the public feud between its co-founders Jihan Wu and Micree Ketuan Zhan dominating the news over the last year.

Global leader in cryptocurrency and Bitcoin mining equipment, Bitmain has continued to expand its business with an announcement today that it has signed a $23 million Antminer S19 Pro Contract with Marathon Patent Group.

Marathon Patent Group (Marathon) is a Nasdaq-listed cryptocurrency mining company based in Las Vegas Nevada, has entered a Long-Term Purchase Contract of $23 million to purchase 10,500 Antminer S19 Pro.

Bitmain’s Antminer S19 Pro is purportedly equipped with the most advanced chipset currently available and continues to dominate the preferences of major mining firms’ orders.

According to Irene Gao, Antminer Sales Director of NCSA Region, Bitmain, these new miners are set to “bring in a new era of Bitcoin mining” and demand for the Antminer S19 Pro is rising throughout the industry.

But how has Bitmain continued to develop, expand and remain profitable throughout a very bitter and public feud between its co-founders Jihan Wu and Micree Ketuan Zhan?

The Last Antminer Shipment Was Delayed

The feud is evidently starting to impact negatively on Bitmain’s operations. In July, some 10,000 Antminers, worth about $10 million, were reportedly “stolen” from a mining facility owned by the company in Inner Mongolia. Some reports say the equipment appeared to have been “illegally transferred”.

On Aug 6, it was reported that Bitmain had to delay shipments of its Antminer bitcoin mining machines by three months, due to the ongoing feud between co-founders, Jihan Wu and Micree Zhan Ketuan, as control of the company intensified.

Bitmain said in the announcement that the delay was a result of “external interference over the company’s management.” Jihan Wu’s faction is reportedly in control of the company’s Wechat account and released the message.

The Feud Recap

The feud between Bitmain’s co-founders began in October 2019, when Wu ousted Zhan in a surprise move. Through mass emails, Wu ordered staff to stop taking orders from then-CEO Zhan, threatening them with termination if they even attended one of Zhan’s meetings.

The news surprised the entire organization as Wu had stepped out of his Bitmain CEO role to focus on his own cryptocurrency startup—Matrixport.

Zhan also refused to take the ousting in his stride and pushed back with legal action—suing Bitmain’s parent company.

In March 2020, China’s Changle district court made a ruling that favored Zhan to freeze out 36% of Fujian Zhanhua’s shares owned by Bitmain. Fujian Zhanhua is entirely owned by Bitmain Technologies Holding, of whom Zhan is the shareholder with the largest stake of 36%.

But on 27th April 2020, Bitmain claimed in their latest statement that the case that Zhan had submitted has no proof that he (Zhan) owns such stake in the company, which makes the claim as baseless for a legal ruling.

Bitmain argued the court’s ruling as only a procedural, jurisdictional rule and a physical fight broke out at a government office in Beijing after local authorities tried to hand the company’s operating license to ousted co-founder Zhan.

When the pair founded Bitmain in 2013, Wu and Zhan rode a historic crypto boom that made them both into billionaires. But the two co-founders have not managed to see eye to eye on the company’s future. When Wu took over, he made of point of undoing a lot of Zhan’s initiatives that had yet to make a profit, including a push into AI chips.

Jihan Wu Regains Control Of China Bitcoin Miner Making Giant Bitmain

The ongoing power struggle for control of Bitcoin mining equipment giant Bitmain has taken an interesting turn as former CEO and co-founder Jihan Wu has regained legal representative status.

According to China’s business registration record of Bitmain, an update on Sept. 14 shows Jihan Wu as the legal representative and executive director of Bitmain’s operating entity—Beijing Bitmain Technology.

Rival co-founder Micree Zhan who was ambushed by Jihan Wu via email last October remains manager of the firm but has subsequently is no longer recognized as Bitmain’s legal representative in China and will no longer have broad powers to act on the mining giant’s behalf.

A further announcement was published by Wu on Sept.15 on the company’s WeChat account. Wu confirmed that he is now the legal representative and Executive Director of Bitmain, and that the company’s respect for Zhan in a management role remains unchanged.

The Feud Recap

The news surprised the entire organization as Wu had stepped out of his Bitmain CEO role to focus on his own cryptocurrency startup—Matrixport.

Zhan also refused to take the ousting in his stride and pushed back with legal action—suing Bitmain’s parent company.

Semiconductor Design Company Bitmain Suspends Sales of Antminers in Mainland China

The multinational semiconductor company Bitmain Technology Holding announced that from October 11, 2021, Bitmain’s Antminer will stop shipping to mainland China in order to comply with a series of local bans on strict crackdowns on cryptocurrencies.

Earlier, China intensified law enforcement against domestic Bitcoin mining activities. Bitmain has decided to stop the sales of its encrypted mining equipment under careful consideration and reduce the supply of mining machines on the market.

In response to the Chinese government’s carbon-neutral policy, Bitmain stated that it has completed the carbon indicator procurement projects for clean energy power generation from China’s Yunnan, Xinjiang, and other places.

The specific use will be elaborated at the 2021 World Digital Mining Summit” held by Bitmain in Dubai.

According to the official announcement, Bitmain Technology Holding stated:

“From October 11, 2021, Antminer will stop shipping to mainland China (excluding Hong Kong and Taiwan).”

The company stated that it will actively contact mainland Chinese customers who have signed forward contracts to seek an alternative that is satisfactory to both parties.

The forced suspension of business in China this time will not affect the delivery process of overseas customers. The Bitmain supply chain team is working hard to ensure the supply of global customers and increase the supply of Antbox-a mobile crypto mining farm, also known as Deerbox, is the first of its kind, a plug-and-play mobile mining farm with low energy consumption and at the same time practical to speed up the construction of overseas mines.

In July, the hashrate, which is used to measure the processing power of the BTC network, plummeted by 50% amid intensified crypto mining crackdowns by Chinese authorities.

Iris Energy to Triple Mining Capacity With Thousands of New Rigs

Iris Energy, a Bitcoin (BTC) mining firm located in Australia, has said that it plans to roughly increase its mining capacity by adding thousands of mining rigs.

The company said on February 13 that it has bought an extra 4.4 exahashes per second (EH/s) worth of Bitmain Antminer S19j Pro ASIC miners, which increased the company’s self-mining capability from 2.0 EH/s to 5.5 EH/s.

Iris’ co-founder and co-chief executive officer, Daniel Roberts, referred to the acquisition as “a huge milestone” for the firm. He also said that the current time period has been “a trying one for both the sector and markets more generally.”

Iris said that the new miners would be put at the company’s centers, but she did not specify which areas those centers are located in. The company runs four different sites, three of which are in British Columbia, Canada, and one of which is in the state of Texas, in the United States.

“without any extra monetary expenditure,” the acquisition of the machines was made possible by the use of the company’s leftover prepayments totaling $67 million to the ASIC miner manufacturer Bitmain.

Iris had a deal with Bitmain for 10 EH/s, however the company claims that the arrangement “has been entirely settled, with no lingering obligations.” It was said that there are no outstanding debts.

The company has said that it is also contemplating its options regarding the sale of surplus miners that are in excess of its 5.5 EH/s of mining capacity in order to reinvest the cash.

Because the units were generating “insufficient cash flow to meet their individual debt financing commitments,” the firm was compelled to disconnect miners that were used as security on a loan worth 107.8 million dollars in November of last year.

Over the course of the last several months, cryptocurrency miners have been subjected to pressure from numerous fronts. They have been forced to contend with low Bitcoin values in the context of high hash rates, high mining difficulty, and high energy expenses.

The pressure drove publicly listed Bitcoin mining businesses to sell off virtually all of the BTC generated for the year of 2022. For example, according to data provided by blockchain research company Messari, Iris sold about 100% of the roughly 2,500 BTC it mined during that year.

Hashrate Index conducted an investigation in February which found that publicly listed miners boosted their output in January. The analysis also found that improved weather and steady rates for energy contributed to the production rise. Iris’ output in January resulted in 172 BTC, which is an increase over December’s total of 123 BTC.

CleanSpark Buys 20000 New Bitcoin Miners to Boost

CleanSpark, a Bitcoin miner, is expanding its mining capacity in the United States by purchasing 20,000 additional Antminer S19j Pro+ machines for a total cost of $43.6 million. It is anticipated that the acquisition would increase the processing capacity of the firm by 37%. Additionally, the transaction will bring the total number of miners acquired during the bear market up to 46,500 units.

After applying coupons for a discount of 25%, CleanSpark will pay $32.3 million for the machines. This comes out to a total price per terahash (TH) of around $13.25, as stated in a statement released on February 16th. It is anticipated that the Pro+ rigs would be delivered in batches between the months of March and May, and they are 22% more productive than their prior versions.

The firm is increasing its mining capacity by taking advantage of the market’s decreasing rig pricing in order to do so while the price of Bitcoin (BTC) is on the rise. According to information provided by Hashrate Index, the price per TH of ASICs with the same Bitcoin mining effectiveness is presently at $15.09, which is a significant drop from the price of $90.72 that was witnessed one year ago. In comparison to other computers of the same ASIC generation, the Antminer S19j Pro+ model, according to CleanSpark, provides a higher return on investment.

According to the business, “Once they are fully operational, it is projected that they will add 2.44 EH/s to CleanSpark’s current 6.6 EH/s of bitcoin mining processing capacity (for a total of 9 EH/s),” which would represent an increase of 37%.

CleanSpark asserts that the acquired models continue to be more appealing to its operations in the present market circumstances and that this trend will likely continue in the foreseeable future. “The S19j Pro+ delivers 122 terahashes per machine and saves an average of 2 joules of energy per terahash when compared to the S19j Pro model of the same generation,” the company said, adding that a total of 15,000 of the new machines will be shipped to the company’s locations in the city of Washington, Georgia. It was announced in January by CleanSpark that the site will be receiving an extension costing $16 million. This expansion is expected to result in an increase in the hash rate of 2.2 exahashes per second (EH/s), bringing the overall hash rate to as high as 8.7 EH/s. Before moving into the premises that was previously occupied by Mawson Infrastructure Group in Sandersville, the firm bought the building in August of the previous year.

According to a research conducted by Hashrate Index, publicly traded mining businesses had an increase in their mining output as well as their hash rates in January, after a challenging year in 2022 that was marked by falling Bitcoin prices and rising power costs. The amount of Bitcoin that was mined by CleanSpark throughout the month increased by a whopping 50 percent, hitting a new monthly production high of 697 BTC. Since December, when it was 6.2 EH/s, its hash rate has increased to 6.6 EH/s.

Other public mining companies, such as Core Scientific, Riot, Marathon, and Cipher, have seen significant increases in Bitcoin production over the course of the past month. This was made possible by consistent increases in the cost of electricity in the United States as well as improved weather conditions.