HashFast, an embattled Bitcoin mining startup, announced on Thursday that it has fired half of its employees as a way to save money.

“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,” Amy Abascal, the company’s director of marketing, wrote in a blog post. “The total reduction was 50 percent of the current staff. This was a fiscally responsible way for us to slow our burn rate, get customers hashing, and continue developing amazing technology.”

On Tuesday, Ars profiled the San Francisco startup and chronicled the numerous arbitration cases and lawsuits that the company has pending against it. Many customers have accused the firm of outright fraud, and some are upset that when the company failed to fulfill its orders, it would not refund the amount in bitcoins as it had previously promised.

Abascal also penned a second post on Thursday, entitled: “On Why We’re Not Scammers.”

“I think it’s time to publicly address the notion that HashFast scammed our customers. Let me tell you that nobody is lying on the beach sipping Mai Tais with your money,” she wrote. “While that would make for a great Wolf of Wall Street type feature film, it’s simply not the reality.”

In a short interview with Ars by phone, Abascal explained that the company had reached a turning point.

“You get to a point where you [find] what you’re doing isn’t working and figure out what you should be doing,” she said. “Every lawsuit that we have costs money to pay lawyers and prevents us from running the business the way we want to run it.”

Headed for Chapter 11 bankruptcy filing?

The company appears to be in crisis mode: Amy Abascal and Joe Russell, a senior account manager, both apologized to Ars for not responding adequately to our repeated attempts to contact the company. They invited Ars back to the HashFast offices on Friday morning, an offer that was readily accepted.

In her blog posts, Abascal also noted that the company has hired Monica Hushen, who is now acting as a “consulting chief financial officer.” Hushen’s LinkedIn profile states that she was previously the senior director of global operations finance at Palm, and before that she was a nine-year veteran of Apple.

One concern that many HashFast customers have—particularly those that are pursuing litigation and arbitration against the firm—is that the company’s collapse may be imminent. Abascal dismissed the notion.

“Hashfast is solvent—I just went over the numbers with our CFO,” she said. “The definition of solvency involves as much assets as it does cash, and we have enough assets.”

She explained that those assets are primarily inventory of its “Golden Nonce” mining chips.

The new plan doesn’t comfort lawyers representing clients who have accused the company of fraud.

“This makes me think they are headed into a Chapter 11 bankruptcy filing to get breathing room to make their new plan work,” Ray Gallo, an attorney leading three arbitration cases against HashFast, wrote to Ars in an e-mail.

“It makes sense to make these changes first, then file for bankruptcy protection against all the old refund claims, then get DIP (Debtor in Possession) financing (nobody would loan them money otherwise), since there are so many creditors now who would grab any capital that came in.”

“From my perspective, I hope that this is a viable business because my clients will get their bitcoins back, ultimately. If it's not, and if it's going down the tubes, then obviously there are creditors that will go unpaid, and that will include my clients,” he added in a telephone call.

The company’s business model appears to have suddenly changed. Rather than selling directly to consumers as it had been as recently as this week, HashFast is now “refocusing” on direct chip sales. The firm is only selling its Golden Nonce chip, but does not list a price, nor an online order option. The site touts this model’s “Low power consumption and up to 750 GH/s.”

HashFast is no longer taking pre-orders on its “Yoli Evo (Batch 3)” mining board, which was available earlier this week. That board was advertised as having a “maximum Bitcoin Mining Performance” of 800 gigahashes per second (GH/s)—the minimum order of five sold for $8,888.

“We want to become the Intel of the ASIC world—our restructuring is a testament to that,” Russell said.

Customers who want to buy the chips will then have to build their own boards or work with other board makers in order to get a working Bitcoin miner.

19 sticky words

One of the primary sticking points among angry customers is the fact that in August 2013, HashFast CTO Simon Barber stated publicly on the BitcoinTalk.org forum: “Orders are taken in BTC, in the unlikely event we get to refunds they will be given in BTC.”

The company further said it would ship its “Baby Jet” 400 gigahash per second (GH/s) ASIC Bitcoin miner by October 2013—which was then delayed until January 2014. By late April 2014, Barber, along with the company’s CEO Eduardo deCastro, issued an “apology to our customers.”

Getting a refund back in bitcoin is not trivial: should these customers (and others) receive their refunds as promised, they would stand to make a profit of more than 400 percent. In August 2013, one bitcoin was trading for around $100—today it’s about $440.

The plaintiff in one of the cases, Morici v. HashFast et al, bought two Baby Jet miners, paying more than $11,500 (paid in bitcoins) in August 2013. Like the other litigants and claimants, he waited and waited and never received his order. Morici’s lawsuit also alleges fraud and breach of contract.

“Knowing what I know now, with respect to their facts, and that they never intended to make their originally stated delivery date, I would not have made the order,” Pete Morici told Ars.

Despite Barber’s unequivocal statement, HashFast representatives are now qualifying those remarks.

“What I don’t think we ever promised is that we would refund in the same amount of bitcoins after conversion,” Abascal said.

“You can also understand that in order to operate a business that we have to turn [those bitcoins] into dollars—so that’s the currency that we’re having to work with. I would love the world to work differently but it doesn’t. When people paid in Bitcoin we converted straight to [US dollars], you can check the blockchain. We wouldn’t have been able to stay alive if we were paying back in the same amount of Bitcoin.”

When Ars pointed out Barber’s clear-cut statement, Abascal countered: “The reality is that what the CTO said, is that he didn’t say that there wouldn’t be a conversion.”

When Ars asked if the company’s policy had changed since that August 2013 statement, Abascal said she wasn’t sure.

“I wasn’t here then,” she stated, saying that she only joined the company a month ago. “I only became aware of that post a couple of days ago.”

Abascal referred Ars to Joe Russell, the senior account manager.

He explained that while the company did accept payment in bitcoins, the products were denominated in dollars.

“The bottom line is that we didn’t sell them in bitcoins, but if someone wanted to buy in Bitcoin, the refund, it should also be realized, is whatever the conversion at the time of the refund of that currency in US dollars would be,” Russell said, dismissing those seeking Bitcoin-based refunds as looking for a “windfall.”

Archived copies of HashFast’s website bear this out, as a February 2014 copy of the site states: “Prices are listed in USD. Payment is to be made in BTC online, or via wire transfers (USD).”

Ars will be visiting the HashFast headquarters on Friday and will report further over the weekend.