Cryptocurrency lending platform Celsius Network is unveiling a new plan to transform itself into a company dedicated exclusively to Bitcoin mining.
Celsius Network, whose core business until last year was cryptocurrency lending, has confirmed its plan to become a company dedicated exclusively to Bitcoin mining, called Mining NewCo.
Court documents outlining the company's new goals reveal that Celsius intends to file an application with the Securities and Exchange Commission (SEC) to register the shares of the new crypto mining company, Mining NewCo, for public listing.
Celsius Network’s new vision is part of the company’s updated restructuring plan submitted earlier this year, which was approved by the U.S. Bankruptcy Court for the Southern District of New York on November 9. In addition to this, the SEC recently issued certain comments on this new plan.
From crypto loans to crypto mining
Celsius Network is abandoning the initial plan outlined with Fahrenheit Group, which acquired the company's assets earlier this year. This initial plan was to create a company called Fahrenheit NewCo. However, due to comments from the SEC on certain aspects of the plan, the company decided to rethink and restructure its proposal.
“Following confirmation, Celsius received comments from the Securities and Exchange Commission on certain aspects of the plan, resulting in Celsius now intending to initiate the process to apply for registration of shares of a new publicly traded Bitcoin mining company that will be owned by Celsius’ customers.”
It is now known that Fahrenheit Group will fund Celsius Network with $50 million, while Celsius will allocate $450 million of its own funds to focus on crypto mining operations through Mining NewCo.
Celsius Network reported that it will file a motion with the Bankruptcy Court in the coming weeks, seeking approval of the submitted amendments and beginning the transition to the new Bitcoin mining company. It also highlighted that Mining NewCo will be a Bitcoin mining company owned by its customers and creditors.
Bitcoin mining is currently one of the most profitable businesses in the crypto industry, with miners on this blockchain network generating, on average, $40 million dollars in profits per day, according to data from The Block Research.
Last October, Bitcoin miners generated profits in the order of $ 885 million dollars.
Payments to Celsius creditors will begin in January
Celsius Network's restructuring plan, which was reviewed by the Securities and Exchange Commission, also outlines the company's plans to begin payments to creditors as early as January 2024.
According to the documents mentioned, Celsius expects that the transition to a Bitcoin mining company will result in “a reduction in management fees and an increase in cryptocurrency liquidity for distribution to customers”; that is, that the activities it carries out around Bitcoin mining will allow it to pay creditors. It is also expected that creditors will be reimbursed with a portion in cryptocurrency and another portion in shares of the new crypto mining company.
However, despite Celsius Network's optimistic projections, some of the company's creditors do not seem to be very happy with the new plan. Celsius had previously been aiming for a restructuring, to steer its business towards high-security custody and the collection of transaction and special service fees.
Celsius Network declared bankruptcy in July 2022, after facing various challenges and difficulties associated with a lack of liquidity, instability and panic caused in the market by the collapse of the Terra blockchain ecosystem and other projects in the crypto industry.
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