While 2018 started on a bright note for giant bitcoin mining firm, Bitmain, the year is set to end on a distasteful note as the Chinese-based company continues to find itself embroiled in a host of difficulties— the latest being a $5 million class action suit.
Bitmain has been accused by more than a 100 bitcoin miners of unfair practice and illegal profiting, after allegedly using its own distributed devices to mine cryptocurrency for its own purpose. As published recently in the Court of California’s docket listing, the company now faces a class-action suit of $5 million. The lead plaintiff, Gor Gevorkyan, who also resides in Los Angeles, has been vocal in his opinion. According to him, the company unfairly ensures its product, which takes quite an amount of time to initialize and set up, would not be able to operate on a low power mode during initialization, consequently costing its customers exorbitant electricity fees while simultaneously mining to Bitmain’s advantage. The curiously subtle change that the company implemented in its product was, in its early stage of garnering market-share, not there according to Gevorkyan.
“In the past, Bitmain ASIC devices could be configured and initialized in low-power mode that did not mine cryptocurrency for Bitmain,” the official court document read. “However, after Bitmain established itself as one of the world’s largest cryptocurrency miners in the last several years, defendant redesigned its ASIC devices to mine cryptocurrency for the benefit of itself rather than its customers who purchase the products.”
The filing alleges Bitmain to be the unjust recipient of an unfair cryptocurrency mining right from the moment initialization starts in what Gevorkyan describes as “difficult to configure,” as the lawsuit records Bitmain responsible for ascertainable and out-of-pocket losses.” Provided Gevorkyan and his other plaintiffs win the case; the class is set to receive $5 million from Bitmain for damages.
Could it Get Any Worse?
Bitmain’s high hopes of finishing the year with revenues above $10 billion is rapidly unfurling in tatters, as several unfortunate developments have seemingly reared up their heads in what could be the worst of time. Coupled with the bearish nature of the market, Bitmain might be operating on losses come the end of 2018 instead.
The worsening trade war between China and the United States could end up affecting the company more than expected, with its reclassified products set to incur high tariffs, where foreign trades accounted for almost 52 percent of Bitmain’s revenue last year. To make matters worse, its planned IPO has also taken a shameful hit after a host of participants listed by Bitmain such as WeChat and Termasek publicly renounced their alleged participation.