Zhan Ketuan's open letter opposes layoffs: Bitmain has healthy cash flow and sticks to its AI business

According to BlockBeats, Bitmain co-founder Zhan Ketuan published an open letter to employees in his WeChat Moments today: "I firmly oppose layoffs!" In the letter, he explicitly mentioned that he opposed Bitmain's recent layoff plan. In the open letter, he said that R&D is the focus of layoffs (Bitmain's team is also mainly composed of R&D), and two-thirds of the Al business will be cut.

Zhan Ketuan believes that compared with competitors' teams of thousands of people, Bitmain's AI business line has less than 800 people, and the company's funds and asset reserves can bear the expenses of this part of the business line. He believes that S17 is still a competitive product in the market, and the upcoming S19 series of mining machines will bring considerable profits to Bitmain, even if the price of Bitcoin does not increase after the halving, it can still bring very good profits.

BlockBeats found that Zhan Ketuan firmly opposed layoffs. At the end of the open letter, he mentioned, "In order to protect the cause created by our team, and to protect the interests of Bitmain, its employees and shareholders, I must stand up!"

The following is the full text of Zhan Ketuan's "An Open Letter to Employees: I Firmly Oppose Layoffs!"

Dear colleagues from Bitmain, I have been away from you for two months and one week. I miss you very much. I wish you all a happy new year! After entrusting the legal affairs to the lawyer, in addition to continuing to pay attention to the company's situation, I am basically on vacation. I feel much better, and the pain in my hands and feet has disappeared. I can finally jump and run freely on the badminton court again. It feels good to be healthy. I wish you and your family good health! Recently, I saw a news about the company's plan to lay off employees. The news said that Bitmain plans to lay off half of the employees, and R&D is the focus of the layoffs (the main component of our team is also R&D), and the Al business will be cut by two-thirds. When I first saw this news, I felt the same as when I found out that my legal person was changed. This must be fake, right? ! After calming down and thinking about it again, I still think this is a rumor. This is too unreasonable! The news said: "Bitmain's operations are normal, cash flow is healthy, and personnel optimization is the pressure of Bitcoin halving in the mining industry." Bitmain's cash flow is of course healthy, and it also has huge virtual currency assets. In 2024, the most difficult month for Bitmain was January, and then the operating indicators improved month by month. Although I haven't seen the financial report in the past two months, I believe that the operating indicators will not be too bad. The current situation is much better than that in the beginning of 2024! Moreover, the S17 series mining machine is the most competitive product on the market! Bitmain is about to launch the more cost-effective S19 series mining machine. Even if the price of Bitcoin does not rise after the halving, this model can also bring very good profits to Bitmain. It is ridiculous to lay off employees in response to the Bitcoin halving five months later! It is reported that "this is a correction to the former chairman's large-scale layout of Al business." Bitmain has about 1,300 employees, of which less than half are in the Al business line, while our friendly companies are all teams of thousands of people. How can such a small and powerful team support an Al business of such strength and scale? How can it be optimized just because the Al business is not profitable for the time being? Without input, what output can there be? The current management team of Bitmain also declared: "Al is the future of the company, and we will continue to develop the Al business." We all understand that the market space for Al is huge and is opening up rapidly. Although the competition in the Al field is very fierce, after four years of continuous investment, we have accumulated very obvious advantages in technology, products and markets. The mining machine market is also very competitive, even more fierce than Al. Bitmain has become the world's number one from scratch! Our team is not afraid of competition! I believe that in the Al market, our team can also go from scratch to the world's number one!

According to the news, "Compared to the hundreds of people of its mining machine competitors, Bitmain has more than a thousand people, and the number of personnel is relatively redundant." Bitmain has accumulated a very large competitive advantage in the mining machine market, one of the important advantages is that it has more people and more money. People and money are necessary conditions to ensure that Jihe is ahead! The virtual currency mining market will continue to grow. As the defending champion, people with business common sense will launch a saturation attack on this market: with far greater investment than competitors, we will gain an overwhelming advantage and continue to expand our market share! Let's do another calculation. Although the market conditions in 204 were not good, Bitmain still had very considerable profits, and 2020 will definitely be better than 2019. Assuming that Bitmain plans to lay off 500 people, and assuming that the cost per person per year is 1 million RMB, that is, 500 million RMB per year, which is about 70 million US dollars. Compared with Bitmain's profits, this cost is not large. To put it another way, even if it is difficult to make a profit, with the company's current funds and asset reserves, the annual expenditure of 700 million US dollars is completely affordable. Such news that is not in line with business common sense and logic should be a rumor! We are a high-tech company, and our employees are our most important assets! If, unfortunately, the current management team really made such a suicidal wrong decision, as the largest shareholder, founder and the first person in charge of the company since its establishment six years ago, I firmly oppose such layoffs! In order to protect the cause created by our team, and to protect the interests of Bitmain, its employees and shareholders, I must stand up!

Zhan Ketuan January 6, 2020