For the riskier miners, things took a turn for the worse when energy prices rose over the summer and Bitcoin crashed. He says industry financiers were practically “giving money away,” relaxing the amount of collateral required for loans and even accepting deposits of Bitcoin while the cryptocurrency’s price continued to soar.Īnd then the party came to an abrupt end. To cover their spiraling costs, Pintos says some miners collected premiums on futures contracts. Miners used their debt to stretch their money even further, holding onto Bitcoin they produced and speculating on its worth. The sudden increase in capacity “was insane, it was ridiculous-but that was what public markets were paying for,” says Pintos.
Bitcoin miner Hut8 added 9,592 machines in the first quarter of this year, increasing its capacity by nearly a third. Another, Iris, defaulted on a $108 million loan.ĭuring the bull run, publicly traded Core Scientific increased mining income by 3,440% to $210.8 million, having raised its Bitcoin mining power by 4.5 times to 13.5 EH/s at the end of 2021 (EH/s is a measure of “hash rate” or deployed computing power).
Another miner, Argo, told investors it’ll shut down if it can’t sell miners it hasn’t even taken out of the box. Core Scientific, America’s largest Bitcoin miner, took on a debt-to-equity ratio almost 12 times greater than CleanSpark during the bull run and now risks bankruptcy if it doesn’t raise money by the end of the year, having lost $1.7 billion in 2022 alone. Meanwhile, the pressure has only continued to build at companies that bungled the Bitcoin crash. Crypto finance giant Grayscale also had hopes of buying miners on the cheap but then pulled back amid economic troubles at its parent company, while Bitdeer set up a $250 million fund to exploit the crisis. At the start of the month, CleanSpark spent $5.9 million on 3,843 miners that Bradford says cost about $1,500 each-down from $13,000 last November during peak Bitcoin mania. Having always sold 70% of the Bitcoin it mined using mostly cheap nuclear energy, CleanSpark is in the enviable position of being rich enough to swoop in to buy box-fresh, top-of-the-line machines from near-bankrupt miners at sensible prices.
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