Arkham identifies the wallets of Ionic Digital, heir of Celsius Network’s mining operations

A new wallet has been identified by Arkham Intelligence, pointing to a mining operation linked to Celsius Network. Ionic Digital was created to contain and operate the mining business of now-bankrupt Celsius. 

Arkham Intelligence is now tracking a mining entity, holding and running the former mining business of Celsius Network. Celsius shut down its last mobile access in early 2024, after filing for Chapter 11 bankruptcy for its failed crypto lending business. From January onward, Celsius also started redistributing funds to its creditors. 

Celsius Network itself still carries known wallets, now containing more than $11.8M in various tokens. Celsius was among the big holders of AVAX tokens, making the bulk of one of its wallets . Celsius is still in the process of consolidating all assets, including minor tokens and sending them to addresses controlled by liquidators. 

Ionic Digital will be part of the creditor compensation efforts

The new entity is known as Ionic Digital, a custodian of some of the Celsius holdings, as well as an ongoing mining operation. Ionic Digital will also issue common stock at a par value of $0.00001 per share, to be used in the bankruptcy compensation of Celsius creditors. For the purposes of the bankruptcy, the shares will have a nominal value of $20 when calculating compensations. The shares will be initially non-transferable and will be blocked from trading. 

Ionic Digital continued to receive small inflows of BTC throughout the day, consistent with mining rewards. The wallet contains 1,962K BTC, estimated at $114M. Inflows consist of 0.8 to 1BTC in daily rewards in the past few weeks. 

One of the receiving addresses tagged as Ionic Digital was created in early February. The entity’s mining is joined with that of Foundry USA, currently the top pool that discovers up to 35% of blocks. 

The establishment of Ionic Digital was already set up in the bankruptcy plan for Celsius Network. The Celsius project crashed in the summer of 2022, following the failure of FTX and several other entities. 

The subsequent bear market made some of the lending protocols non-viable. In the Bankruptcy plan, Ionic Digital was referred as MiningCo, a planned entity to continue the already positive mining business of Celsius, which was not affected by the crash of the lending business. 

Ionic Digital disclosed most of its mining operations are located in Texas, and may depend on local mining operations, as well as electricity pricing. 

The new mining entity reports a total of 127,000 mining ASIC units making around 12.7 exahash per second, inherited from Celsius Network. The current power is just 0.02 of the total mining rate on Bitcoin, but the new entity has managed to secure some of the rewards, with additional inheritance from Celsius. 

Ionic Digital has also disclosed a relatively low cost to mine each Bitcoin. As of December 2022, the mining operation of Celsius had a cost of $13,000 per one mined BTC. Other costs and depreciation meant Ionic logged net losses for the past few years, based on older BTC valuations at the time of mining. However, the mining entity will not carry Celsius debt in its balances and instead will work on its own sustainable operation. 

The mining operation has secured 87 MW of its own power arrangements and may add 142 MW from third parties. Expansion plans under the Cevardale project will allow Ionic Digital to access 240 MW in energy for a potentially more lucrative mining operation. 

To secure its electricity access, Ionic Digital has agreed to pay Hut8, its mining partner, a management fee of $20.4M. At this point, even with BTC trading at $58,000, Ionic Digital may have relatively small net profits, or continue to log losses. 

Ionic Digital shareholders have shown awareness of the mining challenges, and in the future may oppose the Hut8 agreement in a bid to optimize costs. 

Ionic Digital launched at a time of increasing mining competition, where mining operations are heavily subsidized by debt, with the expectation of crushing their competition. The overall network profitability of Bitcoin is also at 3.125 BTC per block or only 450 BTC per day. Miners are selling older coins mined at a lower cost to cover future operations and current expenses. 

Cryptopolitan reporting by Hristina Vasileva.