Due to its bankruptcy, the cryptocurrency lender BlockFi has been given permission to auction off its Bitcoin mining operations.
The company’s goal is to maximise equipment sales to capitalise on the present market climate.
Selling As They Can
BNN Bloomberg reports that on Monday, Francis Petrie, a lawyer for BlockFi, told US Bankruptcy Judge Michael Kaplan that the business has received offers for several of its assets and expects more. The firm agreed to offer $160 million in Bitcoin mining hardware-backed loans a week ago.
BlockFi won bankruptcy court approval to set up an auction for the crypto lender’s digital coin mining business https://t.co/PNdEE9IDC2
— Bloomberg (@business) January 30, 2023
Petrie explained, “We’ve received substantial interest in the market for bidding purposes and current volatility in the cryptocurrency market, which means we need to act quickly.” Bitcoin miners returned to profitability in January as the price of Bitcoin climbed from below $17,000 to above $23,000.
ASICs are a salable asset of BlockFi since they allow efficient Bitcoin mining at low costs. Competitor crypto lender Celsius is also liquidating its mining hardware as part of its reorganisation; the company expects to sell tens of thousands of units.
Submissions of interest in purchasing BlockFi’s property must be received by February 20. BlockFi will return to court to review the proposed offers a week after the auction in early March.
The yield created by such machines is directly tied to the value of the coins they produce, which is why the price of ASICs dropped last year alongside the price of Bitcoin. Similarly to Bitcoin, ASICs were sometimes used as collateral for loans, leaving the market vulnerable to liquidation when it finally collapsed.
One of North America’s top Bitcoin mining companies, Core Scientific, said earlier this month that it would shut down 37,000 Bitcoin mining machines, the operation of which was partially subsidised by Celsius. The miner partially pinned the December failure of the company on Celsius.
Shortly after the collapse of FTX and Alameda Research, to which the lender had over $1.2 billion in combined exposure, BlockFi filed for bankruptcy.
Capitalising on the Collapse
Other companies have opted to take advantage of the low price of mining hardware while several other prominent miners, like Argo Blockchain and Iris Energy, are struggling.
Earlier this week, Blockstream, a Bitcoin technology company, revealed that it had raised $125 million to increase its mining and hosting services fleet. In addition, Grayscale and Foundry established a mining fund in October of last year to take advantage of the mining industry’s shakeout period by acquiring cheap machinery.
Experts are still debating whether Bitcoin’s January gains were a false bull trap or the start of a new Bitcoin bull market. Data from the blockchain suggests that investors formerly in the red are cashing out while they can, contributing to the market’s bearish sentiment.