Giga Watt, the golden child of Washington’s Bitcoin boom, is going through the most troublesome time since its existence. While investors remain dissatisfied and angry, the venture itself is struggling with massive debt. The quick pace of change in Giga Watt’s fortunes, turning from a promising project to a sick unit within just one year, is a case study on the consequences of extreme price volatility in the cryptocurrency sector.
The Story Between October 2017 and October 2018
In October 2017, Giga Watt was riding the Bitcoin wave. Prices for digital currencies were rising consistently, and so was the firm’s reputation. International investors were engulfed in the Bitcoin madness, which made the East Wenatchee company expand to 62 employees and raise several million dollars for its ambitious crypto mining project.
The company was supposed to create a huge campus with 24 prefabricated buildings, which a new generation of crypto miners will call home for yielding digital gold. Even local government officials were excited about the project, which would have most likely been established at a site near Douglas County airport. It was the ultimate 21st-century industrial complex that could run on the vision of Dave Carlson, Giga Watt’s founder.
Cut to October 2018, Giga Watt is a company that is in millions of dollars of debt and several legal problems. About 80 percent of its staff has been handed the pink slip, and the company has suspended all construction. Carlson also stepped down from his role in August.
What Caused Giga Watt’s Sorry Fortunes?
The company was in a sticky situation. However, most of the company’s problems started because of the volatility in the digital currency market. Cryptocurrency prices are falling, and the bear market has lasted for over three months now. Costs for the raw material for mining — that is, electricity — is also uncertain. Smaller players in the mining sector have already been wiped out because of the bear markets. Price corrections are making some large players change their plans too.
George Turner, who will head the company until the appointment of a new CEO, understands these issues and calls for “some really radical changes” at the company, adding:
“It became very clear to us these last few months that we couldn’t wait.”
But internal issues could also be blamed, especially as the company had been facing a $5-million debt, mostly owed to contractors, at the time Carlson left. Delay in the execution of construction projects and cost overruns were some of the problems. The company also faced lawsuits on its initial coin offering, which raised over $22.6 million. The company had secured $25 million in funding from the first three owners of the company.