Crypto companies are facing financial difficulties, and Bitcoin mining companies are also struggling to stay afloat. In June, Compass Mining’s CEO and CFO resigned amid allegations of unpaid electricity bills. A recent report by Bloomberg revealed that many large-scale Bitcoin miners have accumulated significant debt by using their equipment and BTC as collateral for loans to expand their operations. These miners now owe around $4 billion in loans, and with Bitcoin prices reaching new highs, they are liquidating their BTC holdings to cover costs. In the past month, several mining companies have sold BTC to cover debts and expenses. This trend is also affecting the pricing of ASICs at major mining hardware merchants, with prices dropping by up to 70% from their all-time highs. The situation has led to publicly traded industrial miners selling more Bitcoin than they mined in May, potentially leading to downsizing or business closures if they cannot cover their debts. To gain more insight into the current situation, Cointelegraph reached out to Luxor Technologies’ head of research, Colin Harper. Harper explained that miners with high costs and debt are being forced out due to declining profitability. This, in turn, will lead to slower growth in hash rate and falling ASIC prices. He predicts that the next six months will see bankruptcies and mergers in the industry, with miners needing to find cheaper sources of power to reduce costs. Despite the challenging conditions, Harper believes that the bear market presents an opportunity for shrewd investors to prepare for the next bull run. However, he advises against setting up a home mining operation at this time due to unfavorable conditions. As for the upcoming Bitcoin halving, Harper expects miners to increase their hash rate before the event, but rising energy prices and low profitability may hinder their efforts. He also anticipates that industrial mining may be limited by power costs and recessionary pressures.
Bitcoin miners divest their hodlings, as prices of ASICs continue to decline — What lies ahead for the industry?