Industries associated with cryptocurrencies aren’t exempt from the issues that can hit other sectors when times are hard. After climbing to the kind of highs its supporters had always claimed last year, Bitcoin is now hitting the inevitable kind of slump that was always going to follow before it finds its natural level.
Giga Watt, a company based in the US offering remote cryptocurrency hosting plans, has company data centres in Washington. However, on 19th November it filed for bankruptcy protection in a state court, citing Bitcoin’s tumbling price and the fact that it can no longer pay its debts.
The company had been the provider of mining hardware equipment as well as offering hosting plans which promised their customers competitive low fees. At its peak as a top-five crypto mining firm, it had been stable and prosperous enough to be generally considered by the crypto community as one of the bigger and more successful mining firms. However, the last 12 months has seen Bitcoin lose over two-thirds off its December 2017 value of $19,000 for a single token. A quick glance at the court documents for the Giga Watt bankruptcy case shows anywhere between $10 and $50 million owed to creditors, with a mere $50,000 available in assets, making it “insolvent and unable to pay its debts when due”.
Established by former Microsoft software engineer Dave Carlson in 2012, Giga Watt also held an ICO token sale in July of last year (2017) in order to raise money to construct new mining equipment requiring more than 30 megawatts of electricity as well as its own private energy substation.
In addition to possibly over-reaching itself, Giga Watt’s issues largely stem from how the ICO was handled. Carlson claimed in March of 2017 that there was no need for the company to register with the SEC to carry out the ICO, as all that was planned as “a token offering in which people can get access to the electrical infrastructure that powers their miners” rather than an actual currency investment. However, the SEC didn’t agree; in March of this year, a federal court lawsuit was launched by law firm Silver Miller, alleging that investments had been sold without registering those with the regulatory authorities beforehand.
So is this an indication that the demand for cryptocurrency mining is falling, or did Giga Watt just fail to carry out the proper checks and balances when planning the ICO? A clue might be offered in the stockpile of graphics cards that Nvidia can’t shift because cryptocurrency miners are taking a step back from the expensive cards in favour of other technologies that won’t take – theoretically – a thousand years to mine one Bitcoin. It’s more likely that Giga Watt simply weren’t clued in to the changes in how cryptocurrencies are mined.
Bad news for them, but good news for gamers who have been priced out of the market, and can soon look forward to affordable graphics cards once again.