Celsius Network Offers Bitcoin Mining Solution, To Refund Customers

Celsius Network, states bitcoin mining is key to the company's restructuring efforts. (photo: doc. celsius)

JAKARTA - Cryptocurrency lender Celsius Network says bitcoin mining is key to corporate restructuring efforts. This was stated at a US bankruptcy court hearing on Monday, July 18 in Manhattan.

New Jersey-based Celsius received approval from US Bankruptcy Judge Martin Glenn to spend $3.7 million in construction costs at a new bitcoin mining facility and $1.5 million in customs duties and duties on imported bitcoin mining rigs.

Patrick Nash, an attorney for Celsius, told Glenn that bitcoin mining could provide an avenue for the company, to pay off customers, whose assets were frozen in the weeks leading up to its bankruptcy filing. Meanwhile Celsius itself has also stopped other business operations such as cryptocurrency lending.

“In a world where the crypto market is rebounding, the mining business has quite the potential,” said Nash.

Celsius applied for Chapter 11 protection on July 13, posting a $1.19 billion deficit on its balance sheet. Crypto lenders' business models are under scrutiny after a sharp crypto market sell-off spurred by the collapse of main tokens TerraUSD and Luna last May.

"Celsius' assets shrank amid extreme volatility, and the freezing of its customer accounts was an attempt to stem losses and stabilize its business," Nash said.

Celsius hopes the mining effort will help improve its relationships with customers. This is because some of them sent threatening and hate letters to several company employees in the weeks prior to the filing of Chapter 11 (bankruptcy).

But a group of equity investors sees a possible fight for control of bitcoin mining operations. Dennis Dunne, the investor's lawyer, said they might argue that the newly mined coins should be considered to belong to a British subsidiary that raises funds for mining operations, rather than being distributed for the benefit of all Celsius's creditors.

According to the US Department of Justice bankruptcy watchdog, customers may also object to Celsius's spending on bitcoin mining vendors at a time when their own recovery is in doubt.