Evertas is one of a few cryptocurrency insurers that work with Lloyd’s of London. It has acquired Bitsure for an undisclosed sum. Bitsure was a specialist insure of Bitcoin mining operations.
Thomas Shewchuck, co-founder of Bitsure and its president, joins Evertas in the role of head of underwriting.
In recent years, crypto companies have struggled to find insurance products as underwriters are still trying to understand the unique features of digital assets.
Evertas has been able to buck this trend by obtaining authority from Bermuda’s Arch Insurance, to offer mining policies up to 200 million dollars per location. Bitsure had previously been able to write policies up to $5 million. In December, Compass Mining, a bitcoin hosting and mining company, announced that it had developed a 75m insurance policy.
Evertas CEO J. Gdanski said that providing insurance for the equipment used to mine Bitcoin might appear similar to the simple type of property risk cover for data centres and other places. Gdanski says that a lack of understanding of the risk is due to a combination of a general lingering concern about crypto and several factors which affect the value.
Gdanski said to CoinDesk that this crypto risk is the one most familiar to conventional insurance companies. The pricing of mining equipment is highly variable because its replacement value depends on the value the asset being mined. This presents unique and novel issues, which is why other insurers find it difficult to adapt.
Shewchuck said that the value of crypto-mining equipment is affected by the mining difficulty.
In an interview, he stated that margins for miners continue to be crushed as the bear market continues, and we enter the halving. When it is not profitable to mine, people shut down their rigs and sell them to larger players at a discounted price. It means that more equipment is concentrated in fewer places, increasing the risk.
