According to a note sent to its customers on its Telegram Support Group, Giga Watt, a provider of cryptocurrency mining services, has reportedly shut down its day-to-day operations. Moths after its Chapter 11 bankruptcy filing, the company, which has only been operating or a little over a year, has finally closed its doors.
The statement from the company reads:
As was reported in November of 2018, Giga Watt voluntarily filed with the Bankruptcy Court seeking debt relief and reorganization. Subsequent to the filing, day to day operations continued until now. At present, both access and power to the facilities in which Giga Watt operates have been closed to the company.
Giga Watt went on to note that those who have completed their know-your-customer verification can withdraw the remaining crypyocurrencies left in their wallets, although this window closes in March.
In conclusion, the mining firm assured clients that any change to its situation will be communicated to customers, in due time. The closure has been shocking for its clients. While customers knew about the company’s debt situation, no one thought a complete shutdown was imminent.
Giga Watt and Its Unconventional Business Model
Giga Watt was established in September 2017 via an initial coin offering (ICO). Since it launched, the mining company has prided itself on its ability to provide inexpensive alternatives for crypto miners, regardless of their scale. The company claimed that it was able to generate affordable electricity, which was offered to clients for their daily mining operations.
However, the company had a business model that was slightly different from that of other manufacturers of crypto hardware. With Giga Watt, customers maintained ownership of the mining hardware, while the company earned maintenance fees from the client’s mining rewards. Also, clients were informed via Giga Watt’s customer support page on Telegram that they could make payments to have their mining hardware shipped to their homes.
The bitcoin mining company offered much more competitive rates on utilities such as electricity, and this turned out to be unsustainable, especially considering the crypto winter.
Chapter 11 Bankruptcy
Just two days before the company made its formal bankruptcy announcement; customers were reportedly having issues with their miners. Reports surfaced of miners suddenly shutting off, with no explanation from the company seemingly likely. Upon inquiries, customer care representatives of the company had assured clients that all was well. However, when the company declared for bankruptcy, related documents showed that the company’s issues stemmed majorly from non-payment.
Giga Watt eventually filed for bankruptcy on November 11, 2018, at a Washington court. According to the filing, it was revealed that the company owed 20 of its largest unsecured creditors a total of $7 million.
Some of these creditors included Neppel Electric, which had a claim of almost $500,000, and a utilities provider in Douglas County, which was owed $310,000.
Besides, the company’s total assets were an estimated $50,000, while its total liabilities ranged between $10 million and $15 million.
Bitmain Leaves Texas
The crypto winter has continued to impact crypto-based businesses. Earlier this week, Blockonomi reported that mining hardware manufacturer Bitmain would be shutting down operations in its Rockdale, Texas plant. The company, which recently went through a major reshuffle that ended with the replacement of its two co-CEOs, has revealed its intention to shut down its $500 million mining plant, which was opened in August 2018.
Bitmain has been shutting down its international offices of recent. The crypto hardware manufacturer had previously packed up Bitmaintech Israel, the blockchain development center that developed the Connect BTC mining pool. It also confirmed reports it would be closing down its Amsterdam office, as a spokesperson for the firm, said the closure was necessitated by the need to remodel the company’s business framework.