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Some mining companies have encountered problems in servicing loans secured by bitcoin mining equipment. Bloomberg estimates that the total exposure to lenders could be up to $4 billion.
Some mining companies have encountered problems in servicing loans secured by bitcoin mining equipment. Bloomberg estimates that the total exposure to lenders could be up to $4 billion.
The situation arose due to both the worsening of the situation in the cryptocurrency market and the negative revaluation of ASIC devices.
So far, only a few miners have defaulted on their loans, but recent bitcoin sales are showing signs of a crisis. The agency recalled the Bitfarms 3000 BTC application to repay a portion of Core Scientific 2000 BTC and Galaxy Digital Holdings Ltd loan $100 million to cover operating expenses.
Bloomberg predicted that problems in the industry will worsen if the decline in bitcoin price continues. This could lead to further adjustments in the valuation of devices and their sale by lenders. According to Luxor Technologies Corp., the price of the popular Antminer S19 is down nearly 47% from $10,000 in November.
“Mining companies are in pain. Many operations have become unprofitable. Equipment cost decreased. […]. This is exacerbated by volatile electricity prices and limited space supply in data centers.” said Luka Jankovic, credit manager of Galaxy Digital.
Ethan Vera, co-founder of the Luxor Technologies mining pool, said that alongside NYDIG, BlockFi, Celsius Network, Foundry Networks and Babel Finance, he actively lends money to the security of the equipment. Especially those with high collateral ratios are concerned about the “health” of their loan portfolios. The expert estimated the volume of such loans at $ 4 billion.
Arcane Research analyst Yaran Mellerud estimates that the cost of mining 1BTC could be $8,000, assuming average electricity prices and using the latest ASIC devices. The expert added that even while maintaining profitability, it would be difficult for some companies to do without selling bitcoin to meet their credit obligations.
Securitize Capital CEO Wilfred Day has let a number of miners exit, who lost the opportunity to generate positive cash flow and bought expensive equipment. According to the expert, taking into account the overhead and loan interest, the cost of mining 1 BTC for them could exceed $ 20,000.
“They bought tens of thousands of machines, agreed on hosting, deposited money and now they are unable to fulfill their obligations” He announced the day.
Compass Mining Chief Content Officer Will Foxley said that the cost of raising capital has increased due to declining risk appetite.
Recall that on June 22, the hash rate of the Bitcoin network dropped below 200 EH/s. On June 11, it was 231 EH/s, the highest ever.
Earlier, Glassnode analysts noted that miners capitulated after the bitcoin price dropped below $20,000.
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Source: Fork Log
I’m Sandra Torres, a passionate journalist and content creator. My specialty lies in covering the latest gadgets, trends and tech news for Div Bracket. With over 5 years of experience as a professional writer, I have built up an impressive portfolio of published works that showcase my expertise in this field.
