The crypto markets have been melting down this year spiraling down 77% from its all-time highs. But still, a lot of investors and institutional players have continued to invest in crypto assets and up-and-coming blockchain-focused projects. But one sub-sector that has taken a harsh beating from this meltdown is the mining industry, which just saw a calamity as Crypto-mining host GigaWatt Inc files for bankruptcy
GigaWatt has assets less than USD 50000
GigaWatt Inc., which had opened with a lot of publicity and media attention last year in Douglas County to provide turnkey mining services and custom packages tailored to clients’ needs that included a full range of mining services from equipment sales, maintenance and repair to private blockchain servicing, has filed for bankruptcy.
The promoters of the company appeared at Washington’s Eastern District federal court and filled their Chapter 11 documents which revealed that the company had less than USD 50000 worth of assets and its largest creditors owed nearly $70 million.
The documents revealed that Giga Watt’s board secretary and chief coordinator Andrey Kuzenny had signed the court documents as the company failed to sustain a crash in cryptocurrency market values and two class-action lawsuits alleging wire fraud and impropriety in its “initial coin offering,”
In January 2018, A group of investors had filed a lawsuit over project delays that they claim are costing them serious money. The plaintiffs claimed that they had contributed around $20 million in cryptocurrency to the GigaWatt ICO in summer of 2017. That cryptocurrency was worth five times as the markets had touched the all-time highs while the lawsuit was being filed. But investors have nothing to show for it: no crypto, no Giga Watt tokens, and none of the mining equipment that was meant to be supplied.
In a court filing, the plaintiffs stated their “fear that they might never be issued their tokens or see their mining machines activated, and are losing valuable time and money as defendants indefinitely delay the further development of the GigaWatt Project”.
Giga Watt’s ICO sold “tokens,” to raise capital that would be utilized to construct 22 “pods” of high-capacity processing equipment and a private electrical substation. The project was estimated to use more than 30 megawatts of electricity. Although as the time passed, the project missed some crucial deadlines and its ICO clients were not able to start hashing cryptocurrency on the promised schedule. After which the cryptocurrency markets started declining.
The company had been fighting through miserable times since the crypto tide has turned negative. In August CEO and founder Dave Carlson also departed following which the company, in cost-saving efforts cut down its workforce from 63 to 16 workers.
Local media outfits that have covered this news have reported names and an outstanding amount of some major credits that Giga Watt had. This included Neppel Electric of Moses Lake that owed $460,658; Talos Construction of Chelan, $355,344; the Douglas County PUD, $310,329; Schmitt Electric of Wenatchee, $57,160; and Wenatchee law firm Jeffers Danielson Sonn and Aylward, $36,760.
Well, the recent downpour in markets that took bitcoin to below USD 5000 levels had made lives miserable for crypto miners and here we see the first calamity of it. Even though Giga Watt had other problems as well but it all became unmanageable as the markets collapsed.
Will crypto mining industry see more calamities due to falling prices? Do let us know your views on the same
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.