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Bitcoin miners are seeing mixed success in navigating the debt-fueled overexpansion crisis

Published on

January 3, 2023
Read Time:2 Minute, 20 Second

In keeping with a current report In keeping with the Hash Price Index, listed Bitcoin (BTC) miners took on greater than $4 billion price of debt within the run-up to the crypto bull market. Fascinated by hovering costs, the trade rushed to purchase application-specific built-in circuit bitcoin miners on low-cost credit score.

Nevertheless, in at present’s context of bitcoin worth drop, skyrocketing electrical energy costs, decrease market costs for mining rigs and mining difficulties at document ranges, 2022 turned out to be a particularly tough yr for trade gamers. Meaning some maintain up higher than others.

Prime 10 publicly traded bitcoin miners by liabilities | Supply: Hashrate Index

On January third, Bitfarms announced that the corporate bought 1,755 BTC in December 2022 for complete proceeds of $29.9 million. The corporate then used that quantity to repay $16.5 million at its BTC-backed facility, together with $2.0 million in equipment-related debt.

Bitfarms additionally managed to renegotiate miner buy contracts, leading to $45.4 million being worn out with out penalty, whereas establishing a $22.4 million pre-paid stability that may be utilized to future buy contracts. The corporate mined 5,167 BTC ($86.1 million at time of publication) all through 2022 and had an excellent debt stability of $47.0 million on the finish of the yr.

On the identical day, Stronghold Digital Mining announced that it entered into an trade settlement to transform $17.9 million of its debt into most well-liked inventory with a par worth of $23.1 million. The popular inventory would bear no curiosity or dividends and would in flip be convertible into widespread inventory (of negligible par worth) at a conversion worth of $0.40 per share, which is near the inventory's market worth of $0.44 on the time of publication.

Others weren't so fortunate. Cointelegraph beforehand reported on Dec. 21 that Greenidge had signed a $74 million debt restructuring settlement with creditor NYDIG. The deal, if executed, would deliver credit score reduction on the expense of restructuring the corporate from an impartial bitcoin miner right into a internet hosting web site for NYDIG's bitcoin mining rigs. Equally, Core Scientific, one of many greatest gamers within the trade, managed to safe a $37.4 million mortgage however remains to be in chapter.

Not all bitcoin miners began with credit-driven enlargement methods. On January third, Digihost announced that it has elevated BTC manufacturing by 60% yr over yr. The corporate mentioned it had no money owed aside from a $934,500 mortgage on its Alabama facility that was repossessed by the vendor. Cointelegraph additionally reported on Dec. 21 that German bitcoin miner Northern Information mentioned the corporate has no monetary debt however expects $204 million in income in 2022.

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Azeez Mustafa
Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author.
Last Updated : January 3, 2023
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