In 2022, the largest miners sold all mined Bitcoin

More than other market participants, the crisis of 2022 took publicly traded mining companies by surprise,continued to increase capacity on credit over the past two years. The fall of Bitcoin by 76% from the maximum and the outflow of investments caused a crisis in the industry.

Image Source: Cryptocurrency ExchangeStormGain

One of the strategies for attracting investors wasa policy of holding coins to sell them in the future at dramatically high prices. Companies competed not only in terms of power, but also Bitcoin reserves. Core Scientific planned to overtake Marathon Digital by the summer, having increased the reserves to 10.5 thousand BTC.

Stocks of publicly traded companies as of April 2022 Image source:arcane.no

The market has made its own adjustments, which is why the minersabandoned their plans and started selling coins. This did not save Core: having increased losses to $ 1.8 billion, on December 21, the company filed for Chapter 11 bankruptcy with business restructuring.

According to the analytical agency Messari, for 11months of 2022, the top ten mining companies sold 99% of the mined coins, or 40.3 thousand BTC. Some analysts believe that the pressure from the miners did not allow the price to gain a foothold above 20 thousand, others speak of insignificant volume compared to the market as a whole. However, the stock chart superimposed on the price of Bitcoin hints at a correlation.

Image Source:cryptoquant.com

9 out of 10 publicly traded mining companiesexperiencing difficulties. Some have already filed for bankruptcy, while others are renegotiating loan agreements to keep their businesses from shutting down. The main reason is excessive optimism and illiterate financial policy. For most sectors of the economy, a debt-to-equity ratio of two or more is considered high-risk. Leading mining companies have more than exceeded this limit.

Image Source:luxor.tech

While maintaining a relatively low price of Bitcoinmining companies will continue to experience difficulties, and the mined coins will immediately go on sale. At the same time, we are not talking about any significant drop in the hashrate of the network, since miners with a more balanced financial policy are aiming to replace their bankrupt colleagues, and a significant decrease in ASIC prices creates a favorable moment for increasing capacity.

 

Analytical group StormGain

(platform for trading, exchanging and storing cryptocurrency)