A year ago, Giga Watt was the golden child of the state’s bitcoin boom. Today, the company faces huge debts and angry investors, while the cryptocurrency sector is caught up in a massive price correction.
RT @ByRosenberg: A small town in Central Washington put a lot of hopes in cryptocurrency. A company that raised $47M planned a 24-building campus for crypto miners.
A year later, the company is deep in debt, has laid off 80% of its staff and stopped all construction
RT @ruskin147: Classic tale of crypto boom and bust, threatening environment: “miners requested approximately 1,500 megawatts of power — or nearly three times as much as the county’s residents and businesses were using” https://t.co/gcnmZq6V7B
Most of the ICO customers paid with crypto so don't feel too sad, and those that didn't learnt a hard lesson about dodgy speculative assets. Hopefully the builders and land owners received all of their payments though. Think of it as moving imaginary wealth back into the real world.
More like, collapsed outright. After raising $47 million, they are now $5 million in debt, and construction of their 'cryptocurrency campuses' have stopped. The money woes are a combination of money they gave to contractors, which have fallen behind schedule and went over budget, and lawsuits from the company's owners/investors (these people have raised roughly $25 million) due to the company's decision to raise funds by releasing an ICO (producing $22.6 million). Evidently, the ICO money didn't last long and ended up biting them in the end. I can't speak for the validity of the lawsuits, but regardless, it's costing them a ton of money.
The original CEO stepped down, and 80% of their staff is laid off. Doesn't look good for this company.
Edit: This article also mentions the rising costs of electricity, combined with the falling cost of Bitcoin and other coins since earlier this year, as a major cause for the company's lack of revenue and difficulty securing funds.
In Grant County alone, miners requested approximately 1,500 megawatts of power — or nearly three times as much as the county’s residents and businesses were using, said Grant County PUD spokesman Ryan Holterhoff. Chelan and Douglas counties have also seen a surge in demand from prospective miners. A megawatt is enough to power around 600 homes. At Giga Watt, Carlson’s pod project was slated to use 30 megawatts.
The article says 24 prefab buildings. Building 24 buildings at once as a new company sets off alarm bells for me. It also talks about cost overruns. On prefab buildings? Oof.
From the picture, if you look carefully I think you can see almost a dozen of them in an incomplete state (the one on the far left might be done).
It sounds like they didn't stagger the buildout. I can't imagine the property in Central Washington was the expensive bit. If I were involved in this project I'd have been much more comfortable if they had bought all the land, and come up with a three phase plan where they figure out how to do construction without interrupting operations in the other buildings. If the contractor screws up the first 8 you switch contractors.
Or maybe even better, you plan for 32 buildings and do it in 4 phases. Give your salesforce a story about growth and good things in the future. They can work with that.
I feel bad for people who were too ignorant to realize that cryptocurrency is a massive fraud perpetrated by a few very shrewd insiders the same way that Wall Street bankers manipulate financial markets.