Evertas, the pioneering digital asset insurance company, has made an important move in the cryptocurrency insurance space by acquiring Bitsure, the first-ever crypto mining insurance provider. This acquisition marks a strategic step for Evertas as it aims to broaden its coverage and operations across various jurisdictions.
In its efforts to expand and strengthen its position in the market, Evertas has joined forces with Bitsure, a partnership that was established last month. This collaboration led to Arch Insurance International, a partner of Lloyd’s of London, raising its coverage limits for crypto mining operations to an impressive $200 million.
In the past, Bitsure provided an insurance policy with coverage of $5 million per location, and they had plans to extend their services to cover more areas within the market.
The recent acquisition deal between Evertas and Bitsure has been highly praised by industry observers. They believe it will bring strength and support to mining operations, as well as other players like exchanges, as they navigate the challenges posed by market volatility, including the collapse of FTX and unfavorable market conditions that have impacted miners.
As part of this agreement, Thomas Shewchuck, the President and co-founder of Bitsure, will assume the role of head of underwriting at Evertas. This strategic move aims to leverage Bitsure’s impressive 6% mining coverage of the total Bitcoin network, bolstering Evertas’ position as a leading provider of insurance solutions for the crypto industry. The collaboration with Bitsure allows Evertas to tap into their expertise in the mining insurance sector, further enhancing their capabilities to serve the evolving needs of the cryptocurrency market.
Providing comprehensive insurance coverage for digital assets is a challenging task, and the unique nature of cryptocurrencies adds complexity to the process. Many experts believe that the lack of deep insurance coverage has contributed to the collapse of some firms and limited the growth potential in the industry, leaving executives without the desired support and protection.
J. Gdanski, the Chief Executive of Evertas, acknowledged the intricacies involved in crypto mining insurance, which may appear straightforward on the surface but presents significant challenges. One of the key factors affecting the insurance landscape for crypto mining is the impact of market forces, including the underlying asset being mined. These forces can significantly influence the value of mining rigs and create uncertainties for insurance companies.
Given the volatility and rapidly changing market conditions in the cryptocurrency space, insurers face the difficulty of accurately assessing risks and providing adequate coverage for mining operations. The dynamic nature of digital assets makes it crucial for insurance providers to stay vigilant and continuously adapt their offerings to meet the evolving needs of the industry and the risks associated with it. As the crypto market continues to mature, insurers will need to develop sophisticated and comprehensive insurance solutions that address the unique challenges and risks faced by participants in this innovative and rapidly growing sector.
Miners need insurers to survive the winter
In every industry, managing risk is essential for achieving sustainable growth over time. In the realm of digital assets, specialized insurance coverage becomes critical, especially considering the substantial cost of high-powered mining equipment.
Thomas Shewchuck emphasized that the value and profitability of mining equipment are heavily impacted by mining difficulty. As more miners enter the field, the rewards diminish due to increased competition, which can lead to lower income for individual miners. This financial strain may force some miners to abandon their projects and sell their equipment at relatively lower prices, leaving them unable to continue their operations.
For insurers, this situation poses a delicate challenge. If larger players take over mining rigs, the concentration of equipment in a few locations amplifies the insurers’ exposure to risk.
On a more positive note, a well-balanced partnership between miners and insurance firms could provide a solution. Through comprehensive insurance coverage, miners can weather bearish market conditions without resorting to selling their Bitcoin reserves or shutting down their operations. This equilibrium can foster greater stability within the mining sector, safeguarding both miners and insurers from severe adverse impacts during challenging market periods. It highlights the significance of specialized insurance covers tailored to the unique risks associated with digital assets, thereby promoting the sustainable growth of the crypto industry.