Co-founder Jihan Wu has just returned to helm bitcoin mining giant Bitmain once again, and the company is set to revamp their sales strategy in a bid to reverse a decline in market share.
Wu appeared on stage for the first time as the new CEO and Chairman at a customer event hosted by the company, a month after he regained control of Bitmain. He presented clients and partners with new strategies meant to restore the company’s waning market dominance. Basically, Wu proposed to try convincing miners to stick with their products by having the company take on risks related to cash flow, electricity costs, and the volatility of bitcoin price.
With these strategies, Bitmain is placing a big bet on the possibility of the price of bitcoin jumping next year, amidst the expected halving of mining rewards. With the scheduled halving, new supply created within each transaction block is likely to be reduced. Whether this will spark a rally in the same way the first two halvings did is still being debated to this day.
Although the event where Wu made the announcement was exclusive for customers and partners, screenshots of his presentation have been released, and they definitely show Bitmain rolling out three main strategies, which they hope will appeal to mining investors. To begin with, the company seems to have removed their previous sales strategy, where customers had to pay full amount for mining equipment upfront, even if it isn’t due for immediate shipment. This strategy is being replaced with a tiered-down payment structure.
The second strategy Bitmain plans to roll out is targeted towards people who own mining farms that have power resources, but lack the equipment to run at full capacity. Wu said they plan to offer a co-mining agreement giving mining farm operators the opportunity to rent their flagship AntMiner S17 of T17 products. The agreement will cover a full year, with Bitmain covering year-round electricity cost at $0.05 per kilowatt-hour; mining operators will be responsible for maintenance.
Furthermore, the agreement will have Bitmain keeping 75% of profits, while operators take 25%. If revenue is less than the cost of electricity, however, all mined coins will go to Bitmain. If the plan works, Bitmain would once again increase its own mining capacity, which has decreased over the past two years.
Reports made early this year indicate that Bitmain has decreased their self-owned bitcoin hash power in May, dropping it to 237 peta hashes per second, which represents an 88% drop from the April figures. The drop accounts for about 0.5% of their total power. Based on their latest disclosure, however, the company’s proprietary power has managed to rebound over the past six months.
Whether Bitmain’s planned strategies will succeed in delivering the expected results remains to be seen. But the mere fact that such changes are being made is a clear indication of competition in the mining business becoming more intense. Wu admitted that Bitmain’s dominance has waned throughout the year, and that was the biggest reason for his return to the firm’s management.