Bitcoin’s leading global merchant processor, BitPay, has reportedly begun massive layoffs to cut costs at their Atlanta headquarters. This, in conjunction with this week’s change in “Free Plan” pricing terms point to a situation of financial peril for one of Bitcoin’s most stalwart corporations.
Times are tough at BitPay
You could trace issues all the way back to the BitPay-funded college football “Bitcoin Bowl” last December. The financial outlay was considerable and the return on investment negligible. Boosting the mainstream image of Bitcoin was noble, but it was a three-year annual commitment signed through December of 2016. In the aftermath of the first year of spending on this venture, nine employees were laid off weeks later.
Earlier this week, reports of a change in the “Free Plan” surfaced, which severely cut service from the original terms. Originally, the starter plan for merchants was an unlimited amount of transactions.
“Today BitPay is proud to announce a new free plan which offers basic payment processing free-of-charge, forever,” BitPay Co-Founder and Executive Chairman Tony Gallippi said at the time on the corporate blog in July 2014.
It seems that forever only lasts about fourteen months, current customers notwithstanding, as the terms for merchants has just been changed on Wednesday to a capped limit for no-cost Bitcoin transactions of US$1,000 monthly, then 1% charges on transactions, thereafter. Obviously, this was done to increase company revenue, but most merchants aren’t doing that many bitcoin transactions monthly at the present time, so the effects are not widespread.
Today, reports of the current string of layoffs are hitting the Atlanta main office hard, with sources claiming as many as twenty have been let go. Reddit user whatthefuuuuuu, who claims to work within BitPay, has been passing along information on the situation over the past 24 hours. The marketing and newly-implemented “CoPay” departments seem to have been the hardest hit.
The post reads:
“I'm not going to take pictures of coworkers leaving with boxes in their arms in tears. Call the office and ask Sara the receptionist. You could also just come by the office if you are in Atlanta. Look at how few members are on our GitHub page now compared to yesterday. Look at some LinkedIn pages. Some are already updated. Email them using their first name @bitpay.com and watch it bounce back.”
Another post late last night reads:
“There is not a reason to say it's not safe right now. We did keep some developers to ensure payment processing continues to function. Just don't expect much in the way of support since almost all support staff were let go.”
$1.8 million gone
This news coincides with the story we reported on last week of BitPay being scammed out of US$1.8 million in Bitcoin by a slick computer hacker. The thief managed to get CEO Stephen Pair to send thousands of bitcoin to him directly by commandeering an email account of another BitPay executive. The layoffs may be a simple matter of cause and effect, similar to the period after the Bitcoin Bowl in January.
BitPay has been one of the, if not the most successful Bitcoin companies at attracting mainstream merchants to the payment platform. Major acquisitions include PayPal, Microsoft, Dell Computers, and United Way. Their goal as of last fall was to gain over one million merchants by the end of 2016.