no one is spared – After a bullish cycle exceeding all expectations, the crypto market has been in a downtrend since November 2021. A rather sad period for all people and entities exposed to Bitcoin and crypto assets. Whales, venture capitalists, lending platforms, individuals…even cryptocurrency miners are feeling the shock.
Miners must part with their precious BTC
Current market conditions are difficult for all of its players. From the smallest to the biggest. When we see the successive setbacks of Terra Luna, Celsius, 3ACand now BlockFi it reminds us of duty to protect our capital. Among tomorrow’s losers are yesterday’s winners…
Rocked by the “Super Cycle” theory, some miners have had a heavy hand when it comes to taking out loans. Indeed, those who counted on a Bitcoin at $100,000 at the end of 2021 had a gloomy winter. This one doesn’t seem quite finished.
Private and public minors (listed on stock exchanges) find themselves in a delicate financial position. The more established and older ones should be fine, while young mining companies (especially those financed 100% by credit) are having a hard time. The price of bitcoin has returned to an area corresponding to its production price, a blow for crypto-miners.
Blockfusion CEO Alex Martini concedes the company had to part with part of its production of bitcoins to keep the business afloat, ” it was painful but necessary “. Blockfusion has sold for several million dollars in BTC. He also warns that if the market does not turn around in the coming months, he will be forced to sell again to bail out his cash.
>> Bitcoin fluctuates, that’s also why we love it! Embark on the FTX benchmark platform (affiliate link) <<
Crypto mining, a complex activity
Mining cryptocurrencies (industrially) is like a balancing act. In fact, you have to control your energy costown the right material and in provide maintenance. It is also necessary that the market volatility be on his side. Not to mention the local political context around mining facilities, which can shut down your business overnight.
According to data compiled by B.Riley Financialexchange-listed BTC miners borrowed $2.16 billion during the last cycle. Bitfarms alone announced that it had taken out a loan of around $37 million. Adding private miner borrowing as well, the overall score is estimated between 3 and 4 billion.
A lucrative business for creditors (if the borrower does not default). The interest rate observed in the last two years to finance mining machines is astronomical: between 10 and 19% according to CoinDesk which compiles data from the SEC. Faced with deadlines that were impossible to meet, some miners had no choice.
Bitcoin: not always easy to HODL
While waiting for the next few weeks to bring us more concrete elements, certain metrics on chain point to a sale extraordinary of bitcoins. Analyst Julio Moreno affirms this following his observations, according to him ” we are in a phase of miners’ capitulation. »
The last blue peak on the graph represents a strong sales pressure while a part of the miners is no longer in profit. They sell at a loss for pay off their debts Where save their business rapidly. Historically, this kind of movement has coincided with market lows.
Be careful though, because past performance is not indicative of future performance!
The first are the last. The first to get their hands on the precious bitcoins are usually “the last to capitulate”. The abandonment or bankruptcy of certain (besides delighting surviving competition) can signal the point of “maximum suffering” (max bread) bearable. Past this point, they must sell bitcoins and hardware while the survivors prepare for the next bull cycle…
Miners capitulate. Is this a reason to lose faith in the future of Bitcoin? Instead, take advantage of current market conditions to fill your wallet at a lower cost! Register without delay on the FTX reference crypto exchange platform. In addition, you benefit from a lifetime reduction on your trading fees (affiliate link, see conditions on official website).