Fallen crypto lending firm Celsius and its mining unit have filed for chapter 11 bankruptcy. The filing came moments after Celsius paid off its debts to Compound and Maker and its Bitcoin loans. The default is an attempt for the company to stabilize itself while it figures out a way ahead.
As per the filing documents, the company has liabilities worth $5.5 billion, most of which are owed to their customers, amounting to $4.7 billion. Additionally, the filing documents state that Celsius has the necessary permits to continue its business, and its mining unit is also operational.
The firm has revealed its plans to restructure its business plans. According to the revelation, Celsius might seek to use its Bitcoin mining profits to pay off its remaining debts.
However, there are barriers to this as well.
Will Celsius’s Bitcoin mining activities pay off?
According to the court filing, Celsius has over 80,000 Bitcoin mining rigs. Of these, 43,632 rigs are still in operation. Before filing, the firm had revealed plans to up its game to 120,000 rigs. They had plans to produce 10,000 Bitcoins by the end of 2022. However, given the current market slump, mining has not been as lucrative as before.
Last year, Celsius Network invested US$500 million in Bitcoin mining operations in North America. Celsius Mining filed for listing with the SEC in March of this year.
Now Celsius has recently revealed its restructuring steps. Among those steps is one wherein the company will consider selling its assets. This could also include selling their Bitcoin mining rigs, negatively affecting the price of already falling mining rigs.
The price per terahash for well-known mining rigs like Bitmain’s Antminer S19 and S19 Pro is now between $20 and $23 per terahash (TH). The $119/TH they sold for last year is a long cry from this.
At press time, Bitcoin was trading at $22,240.61, up by 4.6% in the last 24 hours.