Bitcoin Miners in A World of Trouble
Bitcoin miners are in a world of trouble now, especially the leveraged ones.
Recent FTX and Alameda fallout brought the entire crypto market down. Bitcoin price has dropped by ~20% from $20K.
Leveraged miners collateralize their mining machines to secure debt financing, which is fine in the bull market. However, as the price dumped and the profit margin squeezed, those miners accumulate debts, struggle to afford interest rates, and may eventually face defaults and liquidations.
Bitcoin miner hash price has plunged to a new all-time low of $58.3k per Exahash per day, approaching many mining rigs’ shutdown prices.
There may very well be another bitcoin miner capitulation just like the recent one shown as the grey bar in the plot below due to the LUNA collapse.
Bitcoin miners distributed an additional 8.25K Bitcoins to shore up their balance sheets amid the FTX and Alameda fallout. This leaves around 78K in miner treasuries, and erases all balance growth in 2022.
Core Scientific Inc., the largest publicly traded Bitcoin mining business in the U.S., reported a $1.7B loss for the first nine months of the year. The company anticipates that existing cash resources to be depleted by the end of 2022 or sooner.
Another Bitcoin miner Iris Energy has recently unplugged a large majority of its mining machines in response to a default notice on ~$107.8M in loans. The company had previously stated that given the current market condition, it was not making enough money to pay for loans, generating only $2M per month in gross profit, versus $7M in debt obligations.