On April 11, it was reported by local news agency Sina Finance that Bitmain Technologies, a cryptocurrency mining company based in Beijing, had allegedly breached tax regulations in China, resulting in significant fines imposed by the local authorities. The Beijing Municipal Office of the State Administration of Taxation is said to have issued a tax penalty to Bitmain Technologies.
As per information obtained from Qichacha, China’s data registry of public and private companies, Bitmain Technologies was fined approximately $3.7 million (25 million Chinese yuan) on April 4, 2023. The company was reportedly penalized for not complying with China’s laws on the administration of tax collection, specifically for failing to pay personal income taxes.
Regulatory and Operational Uncertainty
The tax authority’s statement highlighted violations related to taxes on various forms of income earned by Bitmain employees, including salaries, bonuses, labor dividends, and allowances, among others. Additionally, the statement revealed that Bitmain had been notified of certain tax violations by tax inspectors in August 2022. Despite this, the Beijing unit of Bitmain Technologies has reportedly failed to pay personal income tax amounting to $2.4 million (16.6 million yuan) thus far.
Bitmain is one of the biggest cryptocurrency mining firms in the world. It was established in 2013, and it is well-known for its reputation as a manufacturer of crypto mining-specific equipment and solutions. According to reports, the company was compelled to end its operations in China in October 2021 as a direct result of the blanket ban on cryptocurrencies that was issued by the Chinese government in September 2021.
It remains unclear how Bitmain Technologies has managed to operate following regulatory uncertainty and a significant bear market in the cryptocurrency industry in 2022. Despite these challenges, the company has reportedly continued to achieve success in its business. In December, Bitmain’s latest Antminer product reportedly sold out within a minute, despite the declining profitability of cryptocurrency mining.
Jihan Wu, the founder of Bitmain, established a $250 million fund in September 2022 with the intention of assisting the mining industry during the difficult cryptocurrency winter. Following his departure from Bitmain in 2021, Wu established Bitdeer, a new cryptocurrency mining company that served as a spin-off of Bitmain.
