Giga Watt, a cryptocurrency mining firm launched last year by bitcoin miner Dave Carlson, has recently filed for a Chapter 11 bankruptcy, as it currently owns its creditors millions and has failed to complete its initial plans.
According to CoinDesk, the firm filed for bankruptcy at a court in the Eastern District of Washington earlier this week, and revealed it still owes its biggest 20 unsecured creditors “nearly $7 million.”
The firm, per the documents, has an estimated $50,000 worth of assets, and liabilities that are in the range of $10 to $50 million. Its creditors include electricity provider Neppel Electric, which is owned nearly $500,000, and its local utilities provider, which is owed $310,000.
The minutes of a meeting with the firm’s shareholders reportedly read:
The corporation is insolvent and unable to pay its debts when due. The corporation and its creditors would best be served by reorganization of the corporation under Chapter 11 of the Bankruptcy Code.
Giga Watt notably raised $22 million worth of cryptocurrency last year through an initial coin offering (ICO), and at the time was seen as part of the cryptocurrency ecosystem’s innovation, bringing the 21st-century’s developments to a site near the Douglas County airport, where it was set to set up mining “pods” that, coupled with cheap electricity and proper maintenance, would’ve helped smaller scale miners in the market.
Things didn’t go as planned for the firm, however, as back in January a group of investors sued it for allegedly running an unregistered securities offering. With the lawsuit, the investors were reportedly looking to get their money back, as the firm failed to meet construction deadlines.
Last month, according to the Seattle Times, Giga Watt was already facing millions of dollars in debt, and laid off 80% of its staff while suspending all construction. Carlson himself left the company in August as he “wasn’t able to effect” what he believed was the right direction for it.
Some of Giga Watt’s problems came from the crypto market’s downturn, as since January it has been plummeting. Bitcoin, the flagship cryptocurrency, started the year at little over $13,000, and is now at about $4,600. George Turner, who was running the company at the time, revealed it had to make “some really radical changes” as it “couldn’t wait” for the cryptocurrency market to start recovering.
As CryptoGlobe covered, a research report from blockchain research firm Diar revealed that cryptocurrency mining was starting to become unprofitable for miners paying electricity prices