• BlockFi and Celsius were two high-profile companies that combined crypto lending and crypto mining.
• Both companies have since gone bankrupt, likely due to their heavy investments in bitcoin mining and the disastrous fallout of the past year.
• The downfall of these two companies provides valuable lessons for future entrepreneurs.
The past year has been a tumultuous one for the cryptocurrency industry. After a period of explosive growth and bullish optimism, the market has been rocked by a series of devastating events. Hundreds of billions of dollars have been wiped out, and even bitcoin mining companies have not been spared from the carnage. Two of the most high-profile businesses to suffer from the crypto crash were BlockFi and Celsius, both of which combined crypto lending and crypto mining.
BlockFi first announced its mining operations in May 2021, with a partnership with Blockstream and its long-standing mining unit. Exactly how much hash rate BlockFi was managing through Blockstream was unknown, yet the lending company viewed mining as a complement to its financial service offerings. Meanwhile, Celsius invested heavily in bitcoin mining, with $500 million spent on its mining efforts as of November 2021. In an older interview, former Celsius CEO Alex Mashinsky said the company was “building out a full-fledged mining operation to complement our lending business.”
Unfortunately, both companies were unable to withstand the crypto market crash of 2021 and its aftermath. BlockFi and Celsius both went bankrupt, leading to a domino effect that affected their bitcoin mining activities as well. It’s a stark reminder of how closely intertwined the entire cryptocurrency industry is, and how quickly fortunes can be reversed.
The downfall of BlockFi and Celsius provides a valuable lesson for future entrepreneurs. The combination of crypto lending and crypto mining can be a risky endeavor, and it’s important to have a solid plan in place to manage the risks. It’s also essential to have a good understanding of the market and the potential for rapid changes in the value of cryptocurrencies. By taking a cautious and strategic approach, it’s possible to reap the rewards of the crypto market without suffering the same fate as BlockFi and Celsius.