C

elsius Network's plans to transition from a crypto lending platform to a Bitcoin mining company faces potential challenges, as a US bankruptcy judge has suggested the need for another creditor vote due to changes from the original deal. Let's take a closer look at the hurdles Celsius may need to overcome.

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Regulatory Concerns 

Celsius has argued that moving to Bitcoin mining would allow them to avoid ongoing regulatory scrutiny from the US Securities and Exchange Commission (SEC) over their previous lending and staking activities. However, the SEC has not formally approved of Celsius' new plans yet. Regulators may still have concerns about the company's operations, which could slow down or block their mining pivot. 

Creditor Opposition 

Bankruptcy Judge Martin Glenn noted that Celsius' shift to mining represents "a deviation from the terms creditors voted on" in the original bankruptcy agreement. Two customers have already voiced dissent against the new proposal. The judge believes "the revised deal could face substantial opposition" if presented to creditors for another vote. Gaining creditor approval will be crucial for Celsius to proceed.

While Bitcoin mining profitability has improved this year as prices rose, mining is still a capital-intensive endeavor with no guarantees of profitability long-term. Geopolitical issues, equipment problems, regulation changes, and crypto market volatility all pose risks. Celsius will need to manage costs carefully and have contingency plans in place if market conditions change again.

Celsius' Arguments 

On the other hand, Celsius argues that the mining plan is the best path forward given regulatory concerns over lending/staking. The new deal would provide creditors with a higher recovery rate of 67% compared to 61.2% previously. Celsius has also partnered with US Bitcoin Corp and Arrington Capital to handle the technical side of running a major mining operation.

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