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The ongoing drama at Bitmain seems to be never-ending. The once-dominant manufacturer of bitcoin mining machines has been struggling in recent months. This has all been about the control of the company. The row between the two co-founders Wu Jihan and Micree Zhan is threatening to split the company. This will most likely disrupt the supply of its AntMiner equipment.

The fight for the control of the company started late last year. In October 2019, Wu Jihan ousted his partner Zhan from the operations of the company. He appointed himself the sole legal representative of the company. On his part, Zhan took the matter to the Beijing Haidian District Market Administration.

The official of the Bureau intervened and ruled in favour of Zhan. In early May, the authorities handed Zhan the control of the company. As proof, he got a new business registration license, starting the recovery process.

In the last few days, the dispute between the two reached a new height. This problem started in June when Zhan came over to take control of the company from Wu. Zhan took over operations in Beijing. He also seized the factory in Shenzhen.

Wu Side Seems to Be Losing

The May resolution appears to have given Zhan the energy to send firm bunches on Wu's Authority. No long ago, Zhan made an impromptu entry into the company offices in Beijing and tried to grab the company seal.

From that moment, Zhan has always used private security to gain entry and control the primary office. He has also extended his control to Shenzhen operations. He has also ordered a block on some deliveries because of payment account disputes. Nonetheless, the Wu' side still runs other Bitmain entities, especially Hong Kong holding.

A source close to Wu mentioned that the Wu side would build a new Shenzhen entity. This means that the company could soon have two separate operations. At worse, we could see two versions of AntMiner equipment.

On July 16, the Wu side registered a new company in China called Guiji Yanghang. This will be a subsidiary of another recently registered firm Beijing Guiyuan Dalu.

Meanwhile, as the dispute continues, most of Bitmain's mining farms are struggling. Subsidiaries under Bitmain control a total BTC hash rate of 30%. At one point, the company commanded about 80% of the crypto-mining semiconductors.

The founders launched the company in 2013, at a time when crypto mining was a booming industry. Within a few years, Wu and Zhan were millionaires.

Zhan Comeback

Zhan made a comeback in early June after last years oust. So far, he has been keen to sideline Wu. But the latter hasn't given up yet. Towards the end of May, Wu had somehow sensed that things would not go his way. So, he registered a different company. He has transferred contacts of staff on his side to this new entity.

While this is going on, Zhan is extending his control to Shenzhen. After taking charge of the Beijing operations, he moved to the Shenzhen plant. He also appointed his in-law to lead the activities there. Besides this, he has cut links with customers who have deposited money on Wu accounts.

The Shenzhen factory was Wu's main avenue for serving outstanding orders. Now that things have gone south, his only other viable option is to establish a new supply line. This way, he will be able to meet the demands of agonized customers.

It is still unclear when production will pick up. But Wu would have to convince some of the production team about his vision of the new line of production. As it appears, a majority of them are on the Zhan side.

The Power Struggle Will Affect Bitmain Market Value

In 2018, Bitmain raised over $700 million. During that period, this crypto mining equipment manufacturer was the most-valued crypto startup. At that time, Bitmain's market value was $14.5 billion. The situation has changed from mid last year. Some competitors have entered the space and profited from the wrangles in Bitmain.

The latest standoff could create a dilemma in the market; more so, overseas clients. Most of them are not aware of internal quarrels. Even if they are aware, confusion may still arise.

They wouldn't know which accounts they should deposit money. The biggest of all is the confusion on who controls the AntMiner brand. Furthermore, it is not clear which side manages shipping logistics and after-sales services.

In a letter issued last Friday, Wu tried to convince his staff that he only came in to stabilize the company. The letter claimed that the company was facing severe financial challenges. Wu blamed Zhan for these cash flow problems.

On top of this, he stated that he had started an alternative operational and supply chain system. According to Wu, this will substitute what the Shenzhen factory is doing. So far, it has affected the flow of product shipment. He still controls some fundamental company properties.

AntMiner's WeChat account, which is still in the hands of Wu's team, tried to explain the delayed shipments. The statement said they regret that the deliveries would delay. He cited disruptions by external parties as to the main reason for the delay.

AntMiner Ownership

The AntMiner trademark belongs to Bitmaintech Pte, Bitmain's Singapore entity. But what leaves many wondering is that the same company registered another trademark. So, how could the same Singaporean company register Bitmain Antrack, the new trademark? This happened only a few days after Zhan returned to Beijing.

That aside, Zhan still holds the majority shares in the parent company. Wu controls only 20% compared to Zhan 36% ownership. The holding group traces its roots to the Cayman Islands.

Meanwhile, information coming out of the Hong Kong company seems to point out that Wu still has a say. The entity maintained that he is the chief legal representative of the company.

Right now, it is unclear who owns the company and its flagship AntiMiner brand. Some analysts predict that its dominance might dwindle. Likely, neither of the two warring groups will oust the other. At some point, Zhan offered to pay Wu and other shareholders $4 to buy their stake in the firm.

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