BCause Mining LLC, a Bitcoin mining company based in the US city of Virginia Beach, has received an order to liquidate its assets.
Reported by The Virginian Pilot on Wednesday, the company filed for Chapter 11 bankruptcy earlier this year. With approval from a federal judge, the company can now go for liquidation under Chapter 7.
The mining company entered the spotlight when it received a grant of $500,000 in January 2018 from the city of Virginia Beach to expand its operation to a rented warehouse. In return, the company pledged to invest $64.8 million in a push to expand its business. It was aiming to become the largest crypto mining company in North America.
The company already received $436,823 of the grant at the time of its bankruptcy filing and employed 27 full-time and four part-time employees.
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A long line of creditors
BCause was forced to file for bankruptcy in April after it lost a lawsuit against WESCO Distribution, one of its primary vendors, over a debt of $1.9 million. At the same time, the mining company had to come to a settlement with the electricity provider Dominion Energy over an unpaid bill of $1.7 million.
In addition, BMG Operations, which hosted the operational equipment for the mining firm, is claiming more than $6.8 million in unpaid dues. In total, 23 creditors, including BCause executives, its landlord, and US Customs and Border Protection, are in line to get their share. The total of the claims touched $13.3 million.
Before entering bankruptcy, the company also considered to pay back its creditors by opening a new venture that would act as a currency exchange for digital assets. The plan was squashed as the company would need to raise more capital for the move.
According to BCause’s estimation at that time, it would have gathered $2.12 million if the company went into liquidation. If the figures were accurate, creditors will have to take write off a large part of their claims.