All stocks are pointing in the wrong direction for Kryptovaault this year. The data center company recently had to restructure half a billion in debt.
After several good years for Kryptovault, luck turns in 2022.
– It’s been a terrible year, says Managing Director Kjetil Hove Pettersen.
The company operates bitcoin mining data centers. Profitability depends on three things: the price of electricity, the price of bitcoin, and the extent of competition from other players.
This year, the price of electricity has gone up, the price of bitcoin has fallen and the competition continues blockchainA decentralized “ledger” of digital transactions. The most famous use is the cryptocurrency Bitcoin. has increased.
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Nearly 30 million lost during the ‘crypto winter’
Market conditions have removed all profitability from bitcoin mining in southern Norway. The data centers in Hønefoss and Dale have not been operational since before the summer. At the same time, the costs were turned on.
In Kryptovaault’s recently published annual accounts, it was mentioned that two other companies in the group lost the ability to pay themselves earlier this year.
This is despite several good years of equity building.
It wasn’t enough, says Petersen.
bankruptcy risk
He says the company is saddled with half a billion kroner of debt owed to foreign creditors.
It is about buying machines and servers for bitcoin mining.
They are priced according to market conditions, Pettersen explains. That is, after the price of bitcoin and the competition on the blockchain.
Kryptovaault, which is in the process of transferring capacity to northern Norway, purchased significant amounts of operational equipment around the summer of last year.
After that, the profitability of bitcoin mining fell to historically low levels, Petersen says. As a result, the resale value of the machines also decreased.
The result was that the debt exceeded the security that Kryptovaault could provide for the loan.
— And because we couldn’t function as usual, debt service became a challenge, Petersen says.
– Were you worried about bankruptcy?
– I was obviously worried, when the storm is at its worst, you can do nothing else. But we are a strong company, we have the trust of our investors and our employees, and now we must prove ourselves worthy of this trust.
Negotiated external debt
To resolve the debt situation, Kryptovaault entered into negotiations with external creditors.
The result came in July in the form of a restructuring and a new constellation of owners who stepped in with $12 million, about NOK 130 million, to ensure operations could continue.
And Valinor, owned by wind energy billionaire Lars Helge Helveg, accounts for a significant portion of this amount. He previously held a 21 percent ownership stake in the Kryptovaault Group.
Petersen says the external external debt arising from the purchase of the machinery has also been negotiated.
Only debts associated with the deposit of new money remain. The Kryptovaault manager assures that it will be manageable.
– Call me a cautious optimist. There are still clouds in the sky, but we have passed the biggest hurdles in the form of half a billion kroner debt.
Read on E24 +
Cryptocurrency Profitability Collapse: – Glad I sold the platform
jump result
E24 as yet unpublished accounting numbers have been sent to the owner of Kryptovaault KV Group.
It shows a phenomenal year 2021, with income growth from 172 to 458 million NOK.
In the end, the company earned NOK 86 million, more than double the result in 2020.
So this development will not continue in the 2022 accounts. Pettersen expects electricity prices to rise by 2024. So Kryptovaault decided to move north.
– The price of electricity there is within what should be considered normal in Norway. At this level, we are doing just fine. But when you calculate the price of electricity in NOK per kilowatt-hour, you start to feel tired.
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