Obstacles Faced by Celsius in Bitcoin Mining Plans
Celsius’ plans to venture into Bitcoin (BTC) mining face significant hurdles as a United States judge suggests the need for another vote to address deviations. According to a Reuters report on November 30, Celsius may require another creditor vote to transition from a lending and staking enterprise to a digital asset mining model. The company aims to operate as a mining company after the bankruptcy case to avoid regulatory scrutiny from the Securities and Exchange Commission (SEC) and address other concerns.
Deviation from Creditor Agreement
US Bankruptcy Judge Martin Glenn, responsible for overseeing the judicial process, has highlighted a deviation from what the creditors originally voted on and what the company is now considering. The primary issue lies in potential resistance from the creditors, which could significantly impede progress. The judge urges Celsius to reach an agreement with the SEC to avoid setbacks.
“Although the Commission didn’t expressly reject the company’s plan, Celsius stated that the financial regulator may be unwilling to approve a deal that includes staking and lending-related activities which it has opposed in the country citing improper registrations.”
The company’s attorney, Chris Koenig, argued in court that another vote is unnecessary as the proposed deal benefits all creditors by allowing Celsius to pivot into a mining business. This shift could lead to a more sustainable future for the company, as mining operations may face less regulatory pressure from the SEC, which has previously imposed fines on companies like Kraken for their staking activities.
Analysts also point out the current profitability of Bitcoin mining, as rising asset prices have recovered losses from previous years. Miners struggled in the past but have found innovative ways to stay afloat, including selling BTC reserves, incorporating Artificial Intelligence (AI) computing, and diversifying their assets.
Changes in Deal and Future Management
Two customers expressed their dissent, advocating for a complete liquidation of the company. However, under the revised bankruptcy agreement, the new mining operation is expected to manage $225 million in digital assets, which will be overseen by Fahrenheit. This agreement will result in a 67% recovery rate for creditors, compared to the previous deal’s 61.2%. Moving forward, the company’s mining business will be managed by US Bitcoin Corp, alongside Arrington Capital, as part of the consortium.
