Bitcoin Price Decline Prompts US Mining Firm to Shut Down ‘Indefinitely’
Digital Farms, a California-based cryptocurrency mining company, is putting its operations on hold due to the recent decline in bitcoin’s (BTC) price.
On March 18, the miner’s parent company, investment firm DPW Holdings, filed an update with the U.S. Securities and Exchange Commission (SEC) on its business related to the COVID-19 pandemic, which has been heavily affecting companies and markets globally. Among other closures and down-scalings, its mining business is being shuttered.
“Digital Farms’ cryptocurrency mining operations have been suspended indefinitely, primarily due to the sharp decline in the market price for bitcoin,” the company wrote.
Last May, DPW announced Digital Farms, formerly Super Crypto Mining, had obtained a 617,000 square foot facility in the U.S. to set up operations with “immediate access to 28 megawatts of power and an infrastructure to support up to 300 megawatts.”
Super Crypto Mining was acquired by DPW in January 2018 and later re-branded as Digital Farms. According to DWP’s annual report filed with the SEC in April 2019, the mining operation had started off by borrowing $5 million from two institutional investors and buying a thousand of Bitmain’s Antminer S9 mining machines. Mining of bitcoin, litecoin (LTC) and ether (ETH) under the new owner kicked off in February 2018.
The company’s first yearly revenue from crypto mining was $1.67 million, a small portion of DPW’s total $27 million revenue, according to the 2019 report. The company had been planning to mine the top 10 cryptocurrencies by market capitalization and also offer cloud mining services.
Discussing its scenario under the coronavirus pandemic, DWP said in the latest filing: “Due to the unprecedented market conditions domestically and internationally, and the effect COVID-19 has had and will continue to have on the Company’s operations and financial performance, the extent of which is not currently known, the Company is temporarily suspending guidance for 2020.”
Bitcoin’s price has been dropping since February from levels above $10,000, making it hard for the mining industry to return a profit. On March 3, wider market turmoil brought on by the growing coronavirus outbreak prompted a crash to below $4,000. Prices have since regained poise and are around $6,660 at press time.