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The first bitcoin miner in the world to be publicly listed, having lost $6.8 million because of decrease in bitcoin price, has decided to stop bitcoin mining. The company is going to specialize in remittances.

No more mining. That is the decision of Zhenya Tsvetnenko, the CEO of DigitalBTC, according to the Sydney Morning Herald. After almost two years in bitcoin mining, he believes it is not anymore worth the effort:

“When we saw the big drop in the value of bitcoin, just like a traditional miner, we had to look for something else to do. We have been slowly winding down our bitcoin mining operations and we will be progressively moving away from using it as a currency.”

In March 2014, DigitalBTC, founded just six months before, became listed on the Australian Stock Exchange. It was few weeks after Mt. Gox’s crash, but the price of bitcoin was still around US$600. However, since that time, the cryptocurrency lost more than 60% of its value and bitcoin mining became unprofitable. Indeed, for its 2015 financial year the company reported a net loss of $US 6.8 million.

“As much as we believe that bitcoin as a financial instrument can be a valuable tool, we basically have the opinion that it is going to take longer than we thought” – says Tsvetnenko.

However, the decision to drop the mining does not mean abandoning bitcoin at all. Instead, DigitalBTC decided to turn to remittances to enable Latin Americans working in U.S. to send money home. Its product, AirPocket, is currently in beta period, used by 50 people to transfer money from the United States to the Dominican Republic.

To make the service available to the unbanked, the company is recruiting Air Agents, people that have bank accounts in the destination countries, to act as “mobile tellers”. They would receive bitcoins on their smartphones and give cash to the recipients. A similar network is being established by Abra, a startup that has recently attracted a $14 million investment.

According to Guy Corem, CEO of the mining company Spondoolies-Tech, the competition between bitcoin miners is similar to an arms race. In May 2015, he stated that “the pace of development in the bitcoin world is unlike any other industry”. He believes that in the current bitcoin mining industry only companies with the strongest teams can survive because one mistake is enough to lose the race.

 

Alexey Tereshchenko