Top Public Bitcoin Mining Firms Owes Most Money: A Report

The Bitcoin (BTC) miners witnessed a sort of mixed “success” while tackling the debt-fueled overexpansion crisis. Most of the industry insiders have collected more than $4 Billion of debt in recent crypto run-up.

Citing a report by Hashrate Index on December 23rd, 2022,    over $4 Billion worth of debt were taken by the Bitcoin miners. And notably, “the big-ones have declared bankruptcy because of its unsustainable debt burden.” In the assumptions of price hike, the industry knowers ran for the purchase of Bitcoin application-specific integrated circuits miners at easy credit.

The previous year was not “too good” for the crypto industry, as there were many ups and downs. The prices of most of the cryptocurrencies performed lower than its average. Meanwhile the increased electricity prices and less prices of mining rigs, and extreme mining difficulty in the previous year affected the key-players. That still said, many of those hold quite better than others.

Top-3 public miners by liabilities

The report by Hashrate Index states, Bitcoin miners, “Core Scientific, owes the most money with $1.3 Billion in liabilities on its balance sheet as of September 30th. The second one debtor is Marathon with $851 Million in liabilities. Following these two, Greenidge came at the third place that owes $218 Million, but due to its restructuring process its debt might reduce.

The report further mentioned “how high liabilities these firms have relative to their equity”. In a chart, it showed the top-10 public miners by debt-to-equity ratios. Core Scientific has the highest-debt-to-equity ratio, 26.7. The Bitcoin miners Greenidge and Stronghold have debt-to-equity ratios of 18 and 11.1 respectively.

It must be noted that, in most industries a debt-to-equity ratio of 2 or higher is “considered risky”. But in the Bitcoin mining industry, it should “ideally be substantially lower”.

It is crystal clear that almost half of the firms have debt-to-equity ratios higher than 2. And the whole “Bitcoin mining sector has total liabilities of $4 Billion and equity of $2.2 Billion, giving it a debt-to-equity ratio of 1.8, which is relatively high compared to most other industries.”

The report also noted that many of these public miners are restructuring their debts. And “these debt restructurings  usually work by turning debt into equity but can also imply selling off assets to pay down debts.”

On the other hand, in a November 2022 Bloomberg report mentioned “Miners, who raised as much as $4 billion from mining-equipment financing when profit margins were as high as 90%, are defaulting on loans and sending hundreds of thousands of machines that served as collateral back to lenders.”

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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