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Recently, Crypto Cowboys have headed out to Texas and other parts of the U.S. for low energy costs and favorable political climates. These companies are the crypto veterans and pioneers, but they’re facing new business challenges. Obtaining commercial insurance coverage is one of them—but it doesn’t have to be.
If the crypto world is new, insuring it is even newer. Experience in crypto is like living in dog years; every year is more like seven. In fact, one of the largest carriers leading the insurance world in insuring crypto has only seen one claim to date and they’ve walked through very few operations.
As an experienced insurance agent, my role is to be the man in the middle between large crypto mining operations needing to insure against property losses like fire, lightning, theft, power surges, and the insurance carriers protecting hundreds of millions of dollars of assets if one of those bad situations arises.
In this blog post, I’ll share what I’ve learned in the field about finding effective insurance solutions for business owners in this unique industry. I’ll also give crypto mining operators tips for navigating the insurance market and finding the best coverage options.
Misperceptions of Risk in the Crypto Mining Space
There are a lot of scary pictures of crypto containers frozen over, burned, or improperly set up, but this isn’t the reality for companies investing millions and millions of dollars into larger operations.
The 100MW, 200MW, and 700MW operations will help us advance the understanding of the real risks. The programs and standard protective measures that will arise during this discovery period will open the doors for more carriers to participate in crypto risks. Carriers will bring the cost of insurance down and come to offer better options for smaller companies.
Leading Innovative Insurance Solutions for a Budding Industry
Large miners today will set the precedents for the relationship between crypto miners and insurance carriers. They will lead the way when it comes to establishing standard operating procedures and drive the insurance products to develop and improve risks in this space.
SWBC Insurance Services strives to be the catalyst between the two industries to make this happen.
Whether we are putting together a safety plan for a specific mining location, interviewing senior insurance carrier management, or walking through containers admiring the latest ideas on maximizing efficiency, our goal is to push the insurance industry further in its acceptance of and coverage for crypto mining operations.
This means getting global insurance carriers to consider new options, work together, and develop new products for third parties/hosting clients. In this way, we hope to have multiple coverage and policy options available to mix and match in different ways to get crypto miners the protection they need.
Commercial Insurance Tips for Crypto Mining Companies
The biggest issue to date from the carrier and reinsurance carriers is a lack of quality information on the crypto mining companies looking to obtain insurance. Here are some tips for putting your best foot forward in the insurance world:
- There are only a few carriers in the world considering writing property insurance for crypto miners. Read that again. We will get more on board, but there are only a few at the moment.
- That does not mean pricing is set‐ that means presenting your account well means the difference between the best and worst pricing.
- More carriers competing for crypto mining business is an essential factor for long-term progress.
- High concentrations of property values, high heat, exposure to the weather, quick construction timelines, and difficulty collecting information are the biggest challenges from the carriers’ perspective.
- Agents sending incomplete submissions is a common complaint.
- Most of the time the better we can explain the risk, the less problematic and concerning the risk is to the carrier. Which is great news!
- My job is to help position clients so the insurance carriers want to win your business and offer favorable terms.
In the crypto industry, time is money. It’s all about getting operations up and running and growing to maximum capacity as fast as possible. As such, operators want the easiest, fastest, “please-keep-me-from-having- to-answer-more-questions” solutions.
My advice for business owners in this space is that you will be able to negotiate a better insurance solution by taking the time to do a little extra work with your agent upfront.
At SWBC Insurance Services, we’ve had large‐scale success insuring bitcoin mining and pushed insurance costs down to some of the lowest offered to date. We have great relationships with the participating carriers and have creative ways to structure a risk program, but we are pushing our industry for the insurance “taproot” upgrades. With this being said, our team is quickly becoming an old dog and can help crypto miners navigate the potential pitfalls of insuring a mining operation.
Jarryd Nolen is the Director of Sales for SWBC's Insurance Services. He helps business owners protect their company, employees, and community.