In 2018, the cryptocurrency market started a decline that cost many cryptocurrencies up to 90% of their gains from the January bull run. Many cryptocurrency startups had to downsize their staff while some others shut down operations. Recently, an American based mining firm, Giga Watt, announced that it is shutting down mining operations. Through an email to its customers, the company claimed that the decision was made because it no longer had the funds to keep operating its mining facilities.
Cryptocurrency Mining Facility Shuts
Cryptocurrency Mining Facility Shuts
Down About two months ago, the company filed for Chapter 11 bankruptcy. It admitted that it had lost a large amount from its revenue due to the bear wave that plagued the cryptocurrency market. Shortly after the filing, a document showed that Giga Watt owed more than $7 million to creditors, companies, and investors. The company owed its electricity provider, Neppel Electric up to $500,000 in utility bills.
Right after the company filed for bankruptcy, many of its customers stopped using its services. Only a few continued to use it until recently. The announcement stated that all the activities in the company have been halted indefinitely.
Giga Watt’s Mining Equipments Get Seized
Giga Watt’s Mining Equipments Get Seized
The distinctive business model by Giga Watt allowed the company to sell equipment to miners while they pay them for maintenance out of what they earned. It’s power rates were also cheaper than many other operators but it became unsustainable when the price of cryptocurrencies crashed. Through its Telegram channel, the company announced that it would be giving miners back their mining equipment as long as they are willing to pay for the cost of shipping. However, the company’s facility is currently on lockdown making some equipment unaccessible.
The creditors of Giga Watt will most likely hold on to these equipment until the company is able to pay off its debts. The company is yet to say anything about when it intends to pay the debt stating that no more information will be given until after legal proceedings. It promised to keep customers updated as they receive more information about the situation.
Old Customer Can Withdraw Cryptocurrencies
While the company announced that it was closing shop, it also stated that those customers who previously lost access to their cryptocurrency funds can now access it. They will have access to their funds and will be able to withdraw their holdings into private wallets until March. This is as long as they pass the KYC procedure required.
Bitcoin (BTC) Price Today – BTC / USD
| Name | Price | 24H % |
|---|---|---|
 | $0.00 | -0.15% |
This isn’t the first mining firm that is experiencing the fallout of the cryptocurrency winter. Not too long ago, reports were that the cryptocurrency mining firm, Bitmain, was letting go of 80% of its staff. It also halted operations in Tel Aviv and Amsterdam. Bitmain, the largest cryptocurrency mining firm in the world, also decided to replace its chief executive officers.
Not everyone considers this a bad thing. Researchers at Diar said that the fall of top mining firms was a good thing because it promotes decentralization. Part of the research was as follows:. “When miners shut down operations in December, they solved 22% of the total blocks. This is a drastic increase compared to 6% in the beginning of 2018. So, the BTC network is less prone to attacks since pools that are controlled by BTC.com have lost their dominance in the network.”
Do you think these companies will bounce back when the cryptocurrency industry recovers?
Max writes about blockchain projects and regulation with a special focus on United States and China. He joined Smarterum after years of writing for various media outlets.
