Giga Watt, a U.S. based bitcoin mining firm has declared bankruptcy while still owing million to its creditors, including utility provider in its Douglas County base and electricity provider Neppel Electric owed over $310,000 and almost half a million dollars respectively.
According to a CoinDesk report, the firm has filed for a Chapter 11 bankruptcy at a court in the Eastern District of Washington on Monday. The court document reveals that Giga Watt still owes nearly $7 million to its biggest 20 unsecured creditors. The estimated worth of the firm is less than $50,000, on the other hand, estimated liabilities are in the range of $10–50 million.
A special meeting of the shareholders of Giga Watt was called upon by the director, Andrey Kuzenny who owns more than 10 percent of the mining firm. The minutes of a special meeting held on Nov. 18 reads:
“The corporation is insolvent and unable to pay its debts when due. The corporation and its creditors would best be served by reorganization of the corporation under Chapter 11 of the Bankruptcy Code.”
Founded by bitcoin miner Dave Carlson aimed to aid smaller scale miners by creating customized mining “pods”, a cheap and stable electricity supply and round-the-clock maintenance at a facility in central Washington. The plan was to allow investors to stake in the company’s services, and accordingly an initial coin offering (ICO) in May 2017, which minced about $22 million-worth of cryptocurrency at the time.
A group of plaintiffs sued Giga Watt in January, for allegedly conducting an unregistered securities offering. The accusers desired a return of their investments as the firm did not meet the construction deadline, allegedly the refund contributions promises were also not honoured.
The falling price points of bitcoin and other cryptocurrencies is indeed making it difficult for the miners to continue the much expensive process of mining. Many mining companies are struggling to make the ends meet while some are already pushed to an extent of closing shop.