One of the larger segments selling crypto turns out to be … commercial crypto miners.
As it turns out, lenders are not in the mood to lend to risky businesses like crypto mining anymore. A few are calling loans, or requiring more reserves. Crypto mining, it turns out, is capital intensive for the sophisticated equipment required to do it at scale, and has expensive costs along the way to boot.
Various estimates place the break-even point between $17,600 and $28,000 per BitCoin, to use the best known example, and with it trading below $20,000, well there’s not a lot of margin there. Some miners are raising capital by selling their stash - at the bottom of the market, of course - which only helps depress the market even further.
Back when these things were selling for triple, quadruple the cost to mine this was a no-brainer. Oops, surprise!, and as lenders have belatedly realized, it’s a brainer after all.
Below a snippet from your cnbc link. Celsius has been selling along. The clients were not allowed a transfer out of their management of the funds. Somewhat different than your read. FTX just bought Celsius as it was fully insolvent on the balance sheet. See link below the snippet for FTX deal.
snippet dated 6/13/2022
Celsius is one of the largest players in the nascent crypto lending space, with more than $8 billion lent out to clients and almost $12 billion in assets under management as of May. The group, which offers users higher-than-average interest rates on their deposits, is essentially the crypto equivalent of a bank — but without the strict insurance requirements faced by traditional lenders.
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts,” the company said in a memo to clients on Monday.
Below a snippet from your cnbc link. Celsius has been selling along. The clients were not allowed a transfer out of their management of the funds. Somewhat different than your read. FTX just bought Celsius as it was fully insolvent on the balance sheet. See link below the snippet for FTX deal.
Hold that thought…
Celsius is one of the largest players in the nascent crypto lending space, with more than $8 billion lent out to clients and almost $12 billion in assets under management as of May. The group, which offers users higher-than-average interest rates on their deposits, is essentially the crypto equivalent of a bank — but without the strict insurance requirements faced by traditional lenders.
…let’s see. Pays out high interest (17%) on deposits but there is no underlying business that generates those kind profits. What the name for this arrangement? I’m trying to think. Oh yeah, Ponzi!
The FTX song and dance is the part of the scam con men call “cooling the mark.” You don’t want the mark to know he’s been scammed, or at least delay that knowledge as long as possible. So you string him along with excuses and hopefully he doesn’t get wise until it is too late.