San Francisco-based bitcoin mining startup HashFast Technologies has announced that it laid off 50% of its staff due to problems with its evolving business model.
The announcement, made via the company’s blog, comes amid growing concern regarding the future of the bitcoing mining chip and product manufacturer. HashFast is currently embroiled in two federal fraud lawsuits and five arbitration cases that allege the company is guilty of breach of contract and fraud related to issues stemming from production delays.
HashFast also announced that it has brought in new management. The company named Monica Hushen, a prior HP and ECS Refining executive, as the team’s new CFO. It further confirmed to CoinDesk that 15 employees had been let go as part of the transition.
The company framed the lay-offs as a tough but necessary move to help it “refocus” its business, stating:
“In order to improve our cash flow, as well as focus on ASICs, we made the difficult decision to reduce our workforce by eliminating marketing and customer service roles, as well as some engineering functions.
This was a fiscally responsible way for us to slow our burn rate, get customers hashing, and continue developing amazing technology.”
The pivot, however, may do little to assuage the company’s disappointed customers, some of whom have started a website to detail setbacks in production at the California company.
The announcement notably follows the decision by a Texas court to freeze bitcoin wallets associated with the business this March. HashFash responded at the time by saying that the plaintiff behind the lawsuit had never purchased products from the company.
Growing concern
The staff cuts follow recent notable assertions made by San Rafael-based attorney Ray Gallo, who is representing clients in three of the arbitration cases, to ArsTechnica.
In an interview, Gallo suggested that the company may be facing financial troubles.
He said:
“My concern is that HashFast is or shortly will be insolvent.”
ArsTechnica visited the company’s headquarters as part of the report, though it was not able to talk to any company representatives in an official capacity, it noted that operations appeared to functioning normally.
HashFast has since stated that it has contacted ArsTechnica and that it is working to clarify its concerns for a follow-up report.
New transparency
Speaking to CoinDesk, representative Joe Russell indicated that as part of the changes, HashFast is also looking to become more effective at communicating to the public and its customer base.
Russell framed the company’s outreach to ArsTechnica and other media outlets as part of its renewed commitment to transparency, stating:
“Our intention is to give insight into us as an organization, what we’re looking at as far as the future of HashFast and the challenges we’ve went through.”
Russell also spoke about the business shift, and further commented on suggestions that the company may be preparing a bankruptcy filing, adding:
“A lot of those accusations are either goal-fueled or competitor-fueled.”
The company did not comment further on the status of any of its ongoing legal cases.
Shipments forthcoming
The company also suggested that product shipments are on the way.
HashFast noted that it has been converting its existing system and board orders to ASICs orders, even for those who are currently seeking legal action.
Wrote the company:
“We have a large chip inventory that is immediately available for shipping.”
HashFast said that the conversion of its products will result in customers receiving “significantly more hashing power than ordered”.
Legal disputes continue
Launched in the summer of 2013, HashFast reached the final production stages of its 28nm mining ASIC in September, though skepticism about the company’s announcements was already prevalent in the community at the time.
The root of the current legal issues stems from a company announcement in which it resolved to ship its first batch of Baby Jet mining rigs in October, and guaranteed that the units would be delivered by 31st December or customers would receive a full refund.
One key issue in the lawsuit is that HashFast promised reimbursement in BTC, though questions have been raised about whether the company would violate any laws by not returning customer money in bitcoins.
For more on the initial lawsuit and the legal questions it raises, read our full report here.
Image via HashFast