As the value of bitcoin fell below $5k this week, a cryptocurrency mining firm Giga Watt declared bankruptcy. The US-based bitcoin mining firm currently owes creditors millions of dollars – US dollars – and filed for Chapter 11 bankruptcy in an Eastern District of Washington court on Monday, the 19th of November, 2018. They currently owe over $7-million to creditors.
In documents seen by CoinDesk showed a recent meeting that took place on November 18th, 2018. “The corporation is insolvent and unable to pay its debts when due,” said the minutes of a meeting held this week by Giga Watt shareholders. “The corporation and its creditors would best be served by reorganization of the corporation under Chapter 11 of the Bankruptcy Code.”
One of the groups that’ve not yet been given their cash owed is Neppel Electric, which is apparently owned “almost a half a million dollars.” How could something like this happen? What could this firm possibly have done with all that power?
A cryptocurrency mining operation deals in power, computer hardware, and processing. Cryptocurrencies like bitcoin are able to exist by calculations done by computers. When a computer does a calculation of the code that is bitcoin, a tiny shred of the code is earned by the computer. That computer calculates the code necessary to transfer bitcoin from one location to another, and in return that bitcoin is split – most for the transfer recipient, and a tiny percentage for the bitcoin miner.
Likely largely because of the extreme fall of value of bitcoin and cryptocurrencies in general over the last year, Giga Watt seems to have overpromised what they’d be capable of providing. Even if they did everything they said they’d aimed to do, when your business is dealing in something that’s now worth approximately 1/4 what it was a year ago – you’re gonna have a bad time.
NOTE: As of October 1st, it seemed that Giga Watt wasn’t doing well, but might’ve been able to continue if they did a real nice job fixing their company. They didn’t. VIA an October 1st interview and published by Giga Watt on Medium: “Giga Watt is still in operation, and we have a plan to satisfy our debts, continue to take care of our clients, meet our responsibilities under the law, and eventually bring back as many of our laid-off employees as possible,” said Giga Watt Managing Director George Turner, who is handling operations until a new CEO is hired. “This is a bump in the road, albeit a large one.”