While the entire market focuses on the decline in value of most cryptocurrencies, the news of the moment surrounds Giga Watt, an US Bitcoin mining company that just declared bankruptcy and cited that it has millions in debt, money that needs to go to creditors.
Giga Watt filed its Chapter 11 bankruptcy documents in Washington. This is when it revealed that it now owns the biggest 20 unsecured creditors close to $7 million. This includes $310,000 for the Douglas County utilities provider and close to $500,000 for Neppel Electric, the company’s electricity provider. Court documents show that the company has estimated liabilities between $10 and $50 million while assets are worth under $50,000.
On November 18 a Giga Watt shareholders meeting showed the following statements:
The corporation is insolvent and unable to pay its debts when due. The corporation and its creditors would best be served by reorganizing of the corporation under Chapter 11 of the Bankruptcy Code.
This shareholder meeting was called by director Andrey Kuzenny, who also owns 10% of the company. Dave Carlson, Bitcoin miner, founded Giga Watt. The plan was to open the industry for the smaller miners through the creation of mining pods that were customized, together with a stable and cheap electricity supply in central Washington.
Investors were allowed to buy a company services stake. This was done through an ICO held in May 2017, with raised funding reaching $22 million in cryptocurrency.
Problems for Giga Watt became visible during January when a number of plaintiffs launched a law suit against Giga Watt. The charge was that an unregistered securities offering was going on. Plaintiffs were trying to get a return of the investments since the company did not meet the contract’s construction deadlines. Also, it was highlighted that contributions were not refunded.
Every single time a Bitcoin mining firm goes out of business it is big news since it raises questions about whether or not BTC mining is still viable. In this case it seems that Giga Watt failed to build a good growth plan and underestimated how much would be made, together with company capabilities.