Bitmain Sues Former Employees Who Founded Rival Poolin Mining Pool
In one of the rare incidents involving a dispute between cryptocurrency mining firms, the leading Bitmain company, which is the leading players in the industry, has now locked in a legal battle with rival Poolin firm. Interestingly, Poolin has been co-founded by three formal employees of Bitmain and is now operating in the same crypto mining segment. According to the lawsuit filed by Bitmain, it has suffered major damages and has now sued the Poolin for the damages worth of $4 million. The company alleges that by co-founding rival Poolin, its formal employees have violated the clause of non-competing. Poolin, on its part, submitted to the court their argument that Bitmain failed to pay their dues on time and hence, the agreement between them and the company stands null and void.
Larger Picture:
According to the crypto experts, the dispute is a rare opportunity to look inside the working culture of Bitmain and how it treats its employees in terms of its organizational policies and culture. As far as competition is concerned, Bitmain which owns BTC.com is the largest Bitcoin mining organization in the world while Poolin comes at the seventh rank in the list. There is no immediate threat from the Poolin to the Bitmain in terms of competition; still, the decision of the Bitmain to sue Poolin has come as a surprise for many. Many analysts argue that by taking the matter to court, Bitmain is trying to establish its hegemony in the segment. It is also a symbolic indication for the company’s employees that they should abide by the policy and procedural framework of the company. Preempting that the Bitmain could possibly initiate legal action against them, the three co-founders of Poolin had already filed three separate cases against Bitmain. As of now, there are a total of six legal cases pending in the District Court of Haidian, Beijing.
Revenue Source of Bitmain:
Just so you know, the primary source of revenue for the Bitmain is sales of the mining equipment. This was revealed by financial disclosure that the company submitted to authorities when it tried to go public in the past; however, the attempt proved to be futile. In addition to mining equipment, the company is also involved in products related to the mining software which are used to manage and operate the “mining pool.” The company sold mining equipment worth of $2.7 billion in H1 2018 while the sales of software products amounted to $43.2 million in the same period. The increasing competitiveness in the segment, it seems, has started taking a toll on the players operating in the field of cryptocurrency mining and in order to remain dominant, Bitmain has decided to go ahead with this lawsuit. The Legal procedure will have implications for both the parties and expected to reframe the broad contours of the crypto industry. It might not have a direct impact on the valuation of digital coins, but in the long term, if these legal battles persist, the supply of the cryptocurrency in the market might come under squeeze. Therefore, it is essential for the crypto industry and investors to have a close look at the ongoing occurrences in the mining sector too.
