Celsius crypto lender defends bitcoin mining scheme

Cryptocurrency lender Celsius Network said bitcoin mining is key to the company’s restructuring efforts.

Celsius in New Jersey has received approval from U.S. Bankruptcy Judge Martin Glenn to spend $3.7 million in construction costs for its new bitcoin mining facility, as well as $1.5 million in duties and taxes to import the bitcoin mining facility

Celsius’ lawyer said bitcoin mining could allow the company to stop other business activities, such as lending in cryptocurrencies to repay customers whose balances were frozen in the weeks leading up to the bankruptcy.

Celsius filed for Chapter 11 bankruptcy on July 13, reporting a $1.19 billion deficit on its balance sheet. Crypto lenders’ business models are under scrutiny following the rapid sell-off of the crypto market. This was triggered by the collapse of key tokens Terraced and Luna in May.

Celsius’ assets are shrinking in the face of severe volatility, and the customer account freeze is an attempt to limit losses and stabilize the business.

The company hopes the mining effort will help improve relations with customers. Some have sent threatening and hate mail to company employees in recent weeks.

Investors said they could argue that the newly mined coins should be held as property of the U.K. subsidiary that raised the funds for the mining, rather than distributed for the benefit of all of Celsius’ creditors.

But customers may object to Celsius spending money on bitcoin mining vendors at a time when their recovery is still in question.

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