Celsius, an insolvent cryptocurrency lending platform, filed for financial reorganization in a New York bankruptcy court on Monday, while its Mining subsidiary Celsius Mining filed for bankruptcy.
The fear that the company will be forced to sell the equipment due to liquidation demands in the future has also raised concerns that this will put further downward pressure on mining machine prices.
Celsius Mining currently has 80,850 mining machines, of which 43,632 are in operation, according to Celsius’s bankruptcy filing.
Celsius had expected to grow its mining facilities to about 120,000 by the end of this year, making Celsius one of the largest miners in the industry.
But industry observers speculate that Celsius Mining could be sold to raise cash as a result of bankruptcy, and that offloading of mining platforms could be cumbersome.
“Celsiu sMining’s sale will add downward pressure to already falling machine prices,” said Matthew Kimmell, digital asset analyst at CoinShares.
Celsius Mining auctioned off thousands of newly purchased mining machines in June before officially declaring bankruptcy, Coindesk reported earlier, citing sources familiar with the matter:
The first batch (6000 units) was sold at $28 /TH, and the second batch (5000 units) changed hands at $22 /TH, significantly lower than the average market price at that time.
While it is unclear whether Celsius will fully sell or continue its Mining operations during the company’s restructuring process, Kimmell stated that Celsius appears to aim to continue at least a portion of Celsius Mining’s operations after a restructuring to generate Bitcoin awards and repay some of its outstanding debt.
The downturn in the overall cryptocurrency market, coupled with the collapse of major miners like Celsius, has seen an increasing number of miners struggle to afford their expensive equipment and mining costs.
According to Luxor’s Bitcoin ASIC price index, these include: Antminer S19, S19 Pro, Whatsminer M30…
The latest average price for a similarly sized miner (with an efficiency of less than 38 joules per TH) is around $41 per TH, but it was as high as $106 per TH at the end of last year, down more than 60% to the lowest range since the end of 2020.
But even if Bitcoin’s price has fallen sharply from its November highs and many miners are struggling, Kimmell says it could still be attractive to the market if Celsius decides to sell off the devices (at a discount).
This may provide a good opportunity for well-capitalized miners to expand based on their deployment capability, electricity cost, and efficiency of Celsius equipment.
It is important to note that while Celsius has invested heavily in Mining, it was accused by the Financial Times last week of using significant amounts of its customers’ funds to invest in Celsius Mining through a $750 million credit line.
Accusing Alex Mashinsky, its chief executive, of reneging on a promise not to embezzle customer deposits.