Krypto Miner Consolidation is imminent because some industry players are fighting
Krypto Miner Consolidation is imminent because some industry players are fighting
Since more and more miners report a bad financial pressure in connection with low crypto prices, high energy costs and debts, an acceleration of consolidation is inevitable, said industry observers.
After Core Scientific announced in his files last week that it was considering bankruptcy, Argo Blockchain became the youngest great Bitcoin miner, who revealed financial pressure and said that an expected capital injection of $ 27 million failed.
A company spokesman rejected a statement.
While small and medium -sized companies have difficulties, larger operators of mining facilities have expressed interest in buying opportunities. One of the possible buyers is Marathon Digital, which previously said that it focuses more on organic structure than on the purchase.
"We would like to have an agile strategy ... and the capital resources to be able to use opportunities like this," says Marathon Digital Ceo Fred Thiel said block works.
Thiel refused to comment on whether the company worked with Core Scientific or Argo, but he said that marathon would have an eye on cheap hosting assets.
"Would Marathon take part in buying a hosting site?" said Thiel. "Yes, if the price is absolutely attractive. Or whether it was strategically sensible."
Argo Blockchain The latest miner under stress
While Argo Blockchain explores other financing options, the company sold almost 4,000 new Bitmain S19J Pro machines to raise $ 5.6 million.
"If Argo is not successful when completing further funding, Argo would have a negative cash flow at short notice and would have to restrict or hire the operation," said the company.
nydig agreed to lend up to $ 70.6 million in May in May in order to recapitulate the purchase of digital asset mining equipment for the setup in Texas. It is not clear whether Nydig should provide the additional $ 27 million.
A NYDIG spokesman did not immediately answer a request for comment.
The step takes place after Core Scientific had explained in submissions last week that it would skip upcoming payments because it is faced with liquidity and operating problems. The miner said he hired consultants to check his options, including the search for relief through bankruptcy.
The operator of the crypto mining data center Compute North reported bankruptcy in Texas in September. According to A, the company owes at least 200 creditors of up to $ 500 million Petition Southern District of Texas submitted.
will miner survive the "perfect storm" of the pressure?
Chase White, Analyst at Compass Research & Trading, said in a research Note published on Tuesday that the company had reduced its price for Argo from $ 4.50 to $ 1.
The share price was $ 0.90 on Tuesday at 3:00 p.m. and fell by about 93 % in the previous course and by 19 % on that day.
"While we think [Argo] probably has enough liquidity to stay afloat for the next quarters," said White. "Part of the reason why we thought [ARGO] was a share capital to have enough cash to complete a electricity acceptance contract (PPA) at a fixed price [Texas] Possibility to contain the electricity costs, which now seems to be off the table."
GLYN Jones, CEO of Icebreaker Finance, said that too much of the industry in 2020 and 2021 focuses exclusively on debt -driven growth - while production costs are given less attention.
In September,ICEBREKER started a loan pool for Miner, which he described as "vertically and positioned for success". The loans with interest rates between 15 % and 20 % have a term of 12 to 18 months and are secured by assets such as mining rigs, performance transformers and digital assets.
"We estimate that less than 25 % of the US hashates are equipped with the financial resilience that is necessary to survive the entire range of credible scenarios, including further deterioration in the hash price," Jones told Blockworks. "More than perhaps any other industry, the economy dictates that only the most efficient operators will survive in the long run. No miner has a greater power power, so everything revolves around production costs."
The increasing difficulties in Bitcoin mining and the associated costs-as well as the impending debt-have created "a perfect storm" for many miners, said Thiel. He added that about 20 public miners could go bankrupt due to the current market conditions.
"If you look at the industry and [See] If you have a plant financing, these are today with the highest risk," said Thiel. "Or those who have a lot of guilt."
healthier miners are looking for purchase opportunities
Bill Cannon, head of portfolio management at the digital asset fund manager Valkyrie Investments, said that the stronger companies in the mining area will probably strengthen their position by inexpensive takeover.
Cannon assumes that mergers and acquisitions will increase in this quarter and beginning of next year, since companies on the verge of bankruptcy have to fight to maintain at least part of the shareholder value - and keep their doors open.
"Consolidation is inevitable," said Cannon. "All industries go through it and we believe that the remaining miners will benefit from this time, similar to how the Amazons and Googles in the world have done after they have emerged from the ashes of the Dotcom boom."
Jason Les, CEO of Riot Blockchain, told Blockworks that his company was one of the “best positioned buyers” in the industry. A number of companies, added LES, will go bankrupt or private markets and the associated leveraged Buyouts.
Those who consider bankruptcy should perhaps go this way sooner than later, said Thiel.
"If you run the risk of doing it, hurry up better," he said. "Buyers for their assets will go out of money because there are so many people in bankruptcy in front of them."
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The contribution crypto miner consolidation is imminent because some industry players fight first.
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