Bitcoin Miner Woes Risk Getting Worse After Celsius Collapse
An already beleaguered cryptocurrency mining sector could soon be facing some additional pressure from the Celsius Network bankruptcy filing.
The troubled crypto lender’s mining subsidiary also filed for protection from creditors late Wednesday. Celsius Mining said in the filing that it owns 80,850 rigs -- with 43,632 in operation -- and expects to run about 120,000 rigs and generate more than 10,000 coins by the end of this year. That would make the unit one of the largest Bitcoin miners, which use energy-intensive computers to process records of transactions and earn rewards in the virtual currency.
Industry observers had speculated that the mining business could be for sale as way to raise cash since Celsius halted investor withdrawals last month. Besides any bankruptcy related complications that may now arise, a possible offloading of the rigs could prove to be troublesome.
“Celsius Mining selling machines would add downward pressure to already falling machines prices,” said Matthew Kimmell, digital asset analyst at CoinShares.
The bankruptcy comes as the value of mining rigs plunges with Bitcoin prices in sharp decline. Some of the most popular machine models have fallen as much as 50% since the last bull run and miners are struggling to complete purchase orders they made several months ago. Miners in Texas shut down this week because of stress on the local power grid.
Our trading desk “usually sees a 10-15% slippage of the market of a sell order if the machines want to move quickly,” said Ethan Vera, chief operations officer at crypto-mining services provider Luxor Technologies. “This will likely represent a 60-70% loss on their initial investment.”
The Jersey City, New Jersey-based firm had been touting the unit
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