Market Opportunities: Cryptocurrency Winter: Bitcoin Miners Also At Risk Of Insolvency | News

Bitcoin mining share price drop
Higher production costs due to increased energy costs
Liquidation of cryptographic reserves for operational cash flows

Almost not a day goes by without bad news for the cryptocurrency market. Since the defeat of Terra / LUNA and the decline in Bitcoin, Ethereum & Co. prices, some companies, such as the Voyager Digital cryptocurrency exchange, have gone bankrupt.


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Due to the financial difficulties of the multi-billion dollar hedge fund 3AC as a lender, the default of Voyager could no longer be stopped.

Many Bitcoin mining companies also threw more Bitcoin from their shares onto the market in the last month to cover their running costs. But what is it that puts miners under so much pressure?

Mining at the Brenmarkt

According to research conducted by secret research, there are currently four factors that specifically threaten mining the cryptocurrency foundations in the current market: Bitcoin price drop, increased energy demand to mine, rising energy prices, and higher capital costs due to rising interest rates.

As of this writing, many miners’ inventories have already dropped by more than half. In the case of the Fortress with a minus 85.99 percent. and TeraWulf with a loss of 90.17 percent. (closing prices on July 8, 2022) is even about 90 percent. since the beginning of the year. According to the survey, the recently successful Marathon company may also be dependent on the liquidation of its reserves.

According to the study, bitcoin miners’ cash flow fell by more than 80 percent from its peak in November 2021, when bitcoin mining was very profitable. Due to the huge increase in costs, profit margins have decreased. The market situation also makes it very difficult to raise capital. Investments in the billions needed for technology are no longer obtainable or difficult to obtain, and loans for investments already made during the recovery period are due. The logical consequence is the insolvency of individual companies or the liquidation of assets at a drastically reduced price.

Who has the best chance?

A clandestine research study has been published under the title “Survival of the fittest”. So who are the companies that are credited with having the best chance of survival? Production costs, operating cash flow and balance sheets were examined.

In terms of production costs, Stronghold and Argo Blockchain are in the lead because they obtain energy cheaply and the energy efficiency of their systems is assessed as high. On the other hand, Bitfarms and Hut8 are the worst performers in terms of mining costs.

When it comes to the greatest cash flow, Argo and Core Scientific are at the top. With relatively modest cash flow, Argo has the highest margin of around 77 percent, while Core Scientific has a very high cash flow due to its enormous size.

Argo will probably be the only one of the miners surveyed who will be able to pay for operational cash flow investments and take advantage of all the opportunities that result from the lack of liquidity of other miners.

Investments in equipment that were made during the recovery to increase the mixing speed are being considered and will now be due during the year. For example, Bitfarms has recently been forced to sell bitcoin reserves in order to service maturing bitcoin-backed loans for new machines.

Marathon has the highest outstanding debt of $ 260 million, also measured by the company’s total operating cash flow. Although the Marathon has a high level of fluidity, it risks disappearing if the machines are not put into operation shortly after delivery. A miner could therefore be forced to liquidate his bitcoin reserves. The situation is similar with Riot Blockchain, which is constantly increasing its hash rate, but also cannot finance expansion investments with liquid funds.

In terms of company balance sheets, arcane ranks Marathon and Riot Blockchain as the strongest. On the other hand, Stronghold and Core Scientific are heavily indebted, with little equity and collateral.

Liquidation of Bitcoin reserves is almost inevitable

Thanks to large investments in equipment to increase hashrate, most miners will be forced to liquidate their shares in 2022. According to secret scientific research, the Argo can be clearly defined as the winner of Brenmarkt and the Marathon as the loser.

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Image sources: Gajus /, Bitcap

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