More turbulent times ahead for bitcoin miners, Galaxy Digital says
Fixed-rate contracts could be a thing of the past as the bitcoin mining hosting landscape transforms in 2023, Galaxy Digital said in a recent report.
The hashrate also will end the year up 23% at 325 EH, the firm said in its year-end report on mining.
"The bitcoin mining industry is currently going through a purge of all of the excess and misallocations of capital that supported weak business models during the bull market of 2021," the bank said. "Miners ended 2022 in survival mode, setting the stage for more turbulent times ahead in 2023."
Several bitcoin miners have filed for bankruptcy amid a drop in bitcoin prices and a surge in energy costs, which have squeezed margins. Those that have survived thus far have been more cautious in spending on machines, which have lost tremendous value, and have been more fiscally responsible.
"Going forward, it is essential that miners develop a treasury management strategy that aligns with their future cash needs," Galaxy said. However, it added, "In 2023, we do not anticipate the same level of sell pressure coming from miners."
The firm notes that more than 1 GW of hosting capacity entered bankruptcy in 2022.
Fixed-rate contracts may become a thing of the past."We may see hosting providers push for pass through power contracts plus a spread, while also offering clients certain revenue curtailment benefits," Galaxy said.
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