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- The competition in the Bitcoin mining industry increased this year as the global hashrate grew by approximately 40%.
The recent updates related to Bitcoin Miners shows their balance sheets have been steadily becoming worse since the price of Bitcoin has fallen-off over the past few months. The miners already have $2.5 Billion in loans as many have exposure to FTX along with the crypto lenders.
The process of creating new Bitcoin and adding transaction records to Bitcoin’s public ledger of past transactions or Blockchain can be called Bitcoin Mining. While the Bitcoin Miners work to solve the complex algorithmic problems to mine blocks and also verify the transactions in return for BTC rewards.
Bitcoin Miners Performance
The energy prices have surged, increasing its cost that resulted in Chapter-11 bankruptcy filing of one of the biggest mining data center operators in the U.S., Compute North, in September 2022, when the big names like Core Scientific (CORZ), Argo Blockchain (ARBK) and Greenidge Generation (GREE) called themselves in a liquidity crunch. However, the stock prices of all three publicly traded miners have plunged more than 90% this year.
The un-expected fallout of FTX caused another major hit for the mining industry. It can be seen that not many miners have direct exposure to FTX’s assets.
The Notable ‘Statements’
Ethan Vera, Chief Operating Officer of mining service firm, Luxor, forecasted the total debt for the miners up to $2.5 Billion outstanding and stated “ASIC financiers going through distress and bankruptcy will contribute to the cost of capital rising significantly in the space, and access to capital drying up.”
In some cases, “It might be too difficult for a bankrupt company to continue to operate a loan book, in which case liquidating these existing loans will result in a significant haircut,” as stated by Mr. Vera.
Jaime Leverton, CEO of Hut 8 (HUT), said during the firm’s third-quarter earnings call, “We don’t know where all of the exposed counterparties are. And so for the industry, it’s really going to depend on where new holes show up.”
In Q3, Hut 8 remained focused on optimizing operations across both mining & HPC & achieved strong Q3 revenue of $31.7 million while increasing our BTC holdings by 13.3%. Incredibly proud of our team for mining at modest costs despite market impacts
— Jaime Leverton (@JaimeLeverton) November 10, 2022
More 👉 https://t.co/Aj7tJbaXGm https://t.co/MAZMxjStfk
William Clemente, Co-Founder of crypto research firm Reflexivity Research, warned by referring to the popular Hash Ribbons metric used to monitor miner profitability, “Hash ribbons have just initiated a bearish cross, historically this has been a leading indicator of miner capitulation.”
We are potentially entering into a double dip miner capitulatory period.
— Will Clemente (@WClementeIII) November 28, 2022
Hash ribbons have just initiated a bearish cross, historically this has been a leading indicator of miner capitulation. pic.twitter.com/IwnMix4GzZ
BTC Price
The price of most-traded cryptocurrency did not change a lot while it has started ranging and potentially losing its strength. Bitcoin price is currently trading at $16,973.73 USD with a 24-hour trading volume of $18.85 Billion USD. The token is up 0.09% in the last 24 hours with a live market cap of $326.28 Billion USD.