Long Blockchain backs off bitcoin mining as cryptocurrency falls
Long Blockchain Corp. is taking a step back from crypto — only about six weeks after it got into it.
The company formerly known as Long Island Iced Tea announced Friday that it will not be acquiring Bitcoin mining equipment that it was previously set to purchase. Instead of buying more than 1,000 mining rigs, it says it will focus on completing a merger with Stater Blockchain Ltd., a British firm that develops technology to power digital-currency transactions.
The move is the latest change of direction for the company that came to epitomize the zaniness of the microcap rush to rebrand to cash in on the crypto craze. Long Blockchain almost quadrupled when it changed its name on Dec. 21, just three days after Bitcoin hit its record of $19,511.
The stock is down 50 percent since its peak, though Friday’s announcement lifted it by more than 4 percent to $3.20. Bitcoin has also plunged by more than half since its record to trade below $8,000.
The same slump in Bitcoin that’s been weighing on the company’s shares also affects the risk-reward balance of placing bets on mining. With the digital coin’s price at lows for the year and regulatory scrutiny on the up, investing in expensive rigs may not pay off in the near term.
Long Blockchain said in a press release that the purchase of the machines was just one of its strategic options. "We will continue to evaluate the purchase of mining equipment for Bitcoin and other digital currencies as part of our larger blockchain initiative," Shamyl Malik, head of the LBCC’s Blockchain Strategy Committee, said.
But if the company is depending on Bitcoin posting a 1,400 percent gain like it did in 2017, its options may be limited.