The Beijing No. 1 Intermediate People’s Court denied an appeal filed by Bitcoin mining firm Bitmain that sought over 210 million yuan (approximately $30 million) in damages from its rival Poolin, according to a court filing made public this week.

Bitmain Accuses Poolin Co-Founders of Violating Non-Competes

Poolin and Bitmain have been locked in a fierce legal battle since 2019. In 2017, three former employees of Bitmain-owned mining pool, Pan Zhibiao, Li Tianzhao, and Zhu Fa, left the company to launch their own mining operation, Poolin, which quickly became one of the world’s largest mining pools by total hash rate.

Soon after, Bitmain accused the three of violating a non-compete agreement - which disallowed any former employee from entering a business that directly affected Bitmain’s operations and profits - and launched a legal case.

At the time, Bitmain claimed a total of $4.3 million from Poolin to compensate for alleged damages to the profitability of Later, as the case continued, Bitmain’s lawyers revised the alleged damages to $10 million each from the three Poolin co-founders.

The lawyers argued that the Poolin’s mining pool activity accounted for over 30% of the market share during the period of the trio’s non-compete and demanded an amount proportionate to the projected revenues, which allegedly totaled $30 million.

In response, Poolin’s lawyers countered that Bitmain’s market share had severely declined during the time period in question. This would mean that even if Poolin had not existed, Bitmain likely wouldn’t have been able to generate $30 million in revenue, as other rivalling pools would have taken the former mining giant’s share of the market.

In August, the Chinese court agreed with Poolin’s argument, adding that Bitmain had further failed to provide sufficient evidence for its alleged business losses. As per the court filing, Bitmain was subsequently denied its $30 million claim for damages.

However, the court did side with Bitmain’s appeal for increased fines for the Poolin co-founders. As a result, Zhibiao, Tianzhao, and Fa are now liable to pay a fine of $200,000, $178,000, and $154,000, respectively.

The revised fines are still higher than a judgment passed by the lower-level Beijing Haidian District Court in April, which required a lower fine at the time.

Rivals Are Catching Up

The verdict comes as Bitmain faces the threat of reported product delays and concerns surrounding the quality of its upcoming mining rigs.

Rivals gaining market traction is another concern for Bitmain, said Thomas Heller, Chief Operating Officer of Bitcoin mining and media firm Hashr8. “These ongoing legal battles are a distraction for Bitmain. From a product and sales perspective, MicroBT has already caught up to and surpassed Bitmain, and MicroBT's professionalism will allow them to continue to do well,” Heller told the BTC Times.

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