Canadian crypto mining firm Bit Farms is swamped with high-interest debt.
How Will Bit Farms Pay Everything Off?
The company has been struggling to pay off much of what it owes. Straddled with declining revenue, the company is scheduled to pay more than $20 million by the time 2021 rings in, which means the venture could be in a heap of trouble.
The mining industry has been treated very poorly over the past several months largely due to the coronavirus pandemic that has been spreading across the globe. Many mining firms have been forced to shut their doors either permanently or indefinitely due to the quick spread.
Companies like Riot Blockchain have released several reports detailing the financial hardships executives have been forced to contend with over the past several weeks, while Digital Farms in California is still not open for business.
One of the big problems has been that bitcoin and crypto mining is not considered an “essential business.” Throughout the spread of the pandemic, many regulators and government officials have been fighting back and forth regarding which businesses can and should remain open during this time of crisis. Established businesses such as grocery outlets, supermarkets, banks and certain restaurants have been deemed necessary to maintain at least some level of economic stability in America and beyond.
Several other businesses, however, are believed to be unnecessary during this time, and have been forced to close their doors until governors and other lawmakers give the official “okay” for them to open back up again. Once the virus subsides or disappears, these and other businesses like them can reopen to receive customers.
Sadly, bitcoin mining is not considered an essential business, which means that many firms throughout the globe have been forced to shut their doors. In addition, bitcoin spent two months faltering in price (between March and May of this year), meaning that there wasn’t much profit for bitcoin miners anyway even if their firms had remained open.
Positive news, however, comes following bitcoin’s sudden surge to $10,800. The currency has been on the verge of hitting the $10K mark since last week after it was announced that the Fed was considering more stimulus checks for Americans affected by the virus. In addition, banks are now allowed to provide crypto custody services to their customers, thereby bridging the gap between both centralized and decentralized finance.
With bitcoin suddenly hitting a new high for the year and garnering a new mainstream level of status thanks to its latest relationship with banks, perhaps Bit Farms can garner the revenue it needs to pay off its debt, remain in good shape and not become another financial casualty during this crisis.
To become more effective, Bit Farms may be required to expand its operations with more advanced mining equipment over the next 12 months.