Crypto Lenders BlockFi and Celsius: A Cautionary Tale

• BlockFi and Celsius were two high-profile crypto lending businesses that went bankrupt in 2022.
• Both companies had significant investments in bitcoin mining, but when they sunk, so did their mining units.
• This article explores the histories, downfalls and lessons of both organizations for future entrepreneurs.

The crypto lending businesses of BlockFi and Celsius were two of the most high-profile casualties of the past year’s market crash. The fall of these two companies has been a major blow to the industry, especially considering they had both heavily invested in bitcoin mining. In this article, we take a look at the histories, downfalls and lessons of both companies, in order to provide valuable insights for future entrepreneurs.

BlockFi, the leader in the crypto lending space, announced its foray into mining back in May 2021. It entered into a partnership with Blockstream and its long-standing mining unit, though details of the amount of hash rate they are managing have not been disclosed. They viewed mining as a complement to their financial services, which ultimately proved to be a failed strategy.

Celsius also invested heavily in bitcoin mining, spending $500 million by November 2021. Former CEO Alex Mashinsky said the company was looking to provide a comprehensive financial service for its clients, and that mining was a necessary component of this. Unfortunately, this strategy also failed, and the company ended up going bankrupt.

The failure of both of these companies has been a major blow to the industry, and has provided valuable lessons for future entrepreneurs. Firstly, it’s clear that mining and lending do not necessarily go hand in hand, and that companies should be wary of trying to combine the two. Secondly, it’s evident that a comprehensive financial service is not enough to ensure success, and that companies should focus on their core competencies. Finally, it’s a reminder that companies should operate within their means, and not overextend themselves in the pursuit of achieving their goals.

Ultimately, the failure of BlockFi and Celsius is a cautionary tale for companies in the crypto space, and it will be interesting to see how the industry responds in the coming years. With more stringent regulations and greater market scrutiny, we may see a more conservative approach to business operations and investments. Only time will tell.


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