Bitmain is Facing a $5 Million Lawsuit

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Bitmain is currently staring down the barrel of a class action lawsuit in the state of California for illegally mining cryptos. Gor Gevorkyan – the lead plaintiff in the suit – alleges that while he was trying to set up and configure his Antminers that they were mining cryptos for Bitmain on full power – meaning they consumed a lot of his power. Gevorkyan managed to gather 100 other participants to file the same claim in this class action lawsuit, but Bitmain denies any wrongdoing.

Bitmain Not Wiping Miners Clean Before Shipping

It’s well known that Bitmain often use ASIC mining rigs for a few months to “fully test” each and every mining rig before it’s shipped. This court case could simply be due to the fact that Bitmain pulled these miners out of the racks, packaged them, and posted them – missing out the step of wiping all settings. If this is the case, when the miners are powered up, they would begin automatically connecting to the Bitmain pool and mining cryptos for Bitmain – exactly what Gevorkyan is claiming happened.
The complaint issued by Gevorkyan reads, “Until the complicated and time-consuming initialization procedures are completed, Bitmain’s ASIC [Application-Specific Integrated Circuit] devices are preconfigured to use its customers’ electricity to generate crypto currency for the benefit of Bitmain rather than its customers.” This could further bolster the argument that customers are not taking the correct precautions when installing their new mining hardware, and that they should fully wipe any settings and start fresh.

ASICBoost Now Available

In another round of controversy facing Bitmain, it finally released its ASICBoost firmware upgrade to the general public. When Bitmain is “testing” the mining rigs, it enables this feature, but disables it right before shipping – giving itself a huge advantage over the competition in its mining operations. The new upgrade caused a lot of outrage amongst the mining community, especially when it meant many miners couldn’t connect to their desired mining pools anymore.

Not Great News Before Its IPO

Bitmain recently submitted a draft application for an IPO with the Hong Kong Stock Exchange, meaning this lawsuit couldn’t have come at a worse time for the firm. If the lawsuit goes badly, investors could end up being spooked and causing the value of the firm to tank significantly. The IPO is expected to raise over $2 billion should the application proceed, which we are expecting to see in the first quarter of 2019.
There is a good chance Bitmain can shake off this lawsuit thanks to a few underlying technicalities. However, Bitmain should be wiping all of its miners before shipping rather than expecting miners to do that. The outcome of this case could make or break the mining giant’s IPO – so all eyes on the courtroom, as drama is about to unfold.