Evertas, a crypto insurer, acquires Bitsure, a specialist in bitcoin mining coverage.

Evertas, a crypto insurer, acquires Bitsure, a specialist in bitcoin mining coverage.

The Blockchain Industry: A Closer Look at Insurance for Bitcoin Mining Operations

The blockchain industry has seen significant growth in recent years, with cryptocurrencies like Bitcoin becoming increasingly popular. However, as this new digital economy emerges, unique challenges and risks have also arisen. One area that has faced particular difficulty is insurance for Bitcoin mining operations. Traditional insurers have struggled to understand the intricacies of this specialized sector, making coverage hard to come by. However, one company, Evertas, has made a notable move in this space by acquiring Bitsure, a specialist insurer of Bitcoin mining operations.

Evertas and Bitsure: A Promising Partnership

Evertas, known for its collaboration with the Lloyd’s of London market, recognized the need for insurance in the crypto industry and sought to address it. As part of its efforts, Evertas acquired Bitsure for an undisclosed amount. Bitsure co-founder and president, Thomas Shewchuck, has joined Evertas as the head of underwriting, bringing his expertise in insuring Bitcoin mining operations to the table.

The Challenges of Insuring Bitcoin Mining Equipment

Insuring the specialized equipment used for Bitcoin mining may seem similar to insuring other types of property, such as data centers. However, there are unique factors and risks involved that make it a poorly understood area for insurers. J. Gdanski, CEO of Evertas, explains that the value of mining rigs is tied to the value of the asset being mined, which introduces variability in pricing. This, combined with the fear and unfamiliarity surrounding cryptocurrencies, creates challenges for insurers.

The Complexity of Crypto Mining Equipment Valuation

The value of crypto mining equipment is not solely determined by its physical characteristics but also by future cash flow and mining difficulty. The number of miners on the network affects the number of Bitcoin awards, making it a zero-sum game. As more miners join the network, the rewards are spread thinner, leading to decreased profitability for individual miners. This, in turn, impacts the valuation of mining equipment.

Evertas’ Unique Insurance Offering

Evertas, with its acquisition of Bitsure, has positioned itself as a pioneer in the insurance industry for Bitcoin mining operations. The company has received authority from Arch Insurance, based in Bermuda, to offer mining policies of up to $200 million per location. This represents a significant increase from Bitsure’s previous authority to write policies of just $5 million per location.

The Future of Insurance in the Blockchain Industry

The insurance landscape in the blockchain industry is slowly evolving. Companies like Evertas are leading the way by recognizing the unique risks and challenges faced by crypto businesses. As the industry continues to mature, it is expected that more insurers will enter the market, offering specialized coverage tailored to the needs of blockchain-based businesses.

In conclusion, the acquisition of Bitsure by Evertas highlights the growing demand for insurance in the blockchain industry, particularly in the realm of Bitcoin mining operations. The complex nature of crypto mining equipment valuation and the general uncertainty surrounding cryptocurrencies have made it a challenging area for insurers to navigate. However, companies like Evertas are stepping up to address these challenges, providing much-needed coverage and expertise to the crypto community. As the industry continues to grow and evolve, it is essential for insurers to adapt and understand the unique risks and opportunities presented by blockchain technology.

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