Bitcoin, the oldest and largest cryptocurrency, closed last year with a loss of more than 60%. Additionally, the mining industry suffered from BTC’s sharp price declines, with revenues falling 37.5% in 2022 to $9.55 billion.According to Glassnode data, mining revenues stood at $15.3 billion in 2021. However, the high-profile collapse of the TerraUSD ecosystem in May and the FTX crypto exchange in November negatively affected the industry as a whole.Moreover, rising interest rates worldwide have increased pressure on risk assets, including equities. Cryptocurrencies, which are highly correlated with the stock market, have also begun to lose, negatively affecting the condition of digital assets mining companies.The miners’ daily revenue index reached a record high of $63 million in November 2021. However, by the end of 2022, it was at only $16 million, recording a very dynamic depreciation. Keep Reading Doug BrooksAccording to Doug Brooks, a Senior Advisor at XinFin Foundation, there are three main drivers for the strong decline in revenues: large increase in energy prices, lower value of Proof of Work currencies like Bitcoin and rising competition.”There are more miners than ever now, some
are even publicly listed companies, so there is less bounty for each miner
since the pot size is limited,” Brooks commented. BTC Miners’ Debts GrowAs revenues and profitability declined, Bitcoin miners found it increasingly difficult to repay their liabilities. According to Luxor data, the debt-to-equity ratio has tripled for many popular and publicly listed mining companies.For Core Scientific, one of the BTC miners from Wall Street, the ratio reached 26.7. In addition, Argo Blockchain (NASDAQ:ARBK), one of the world’s largest miners, increased its debt, with the debt-to-equity ratio jumping to 8.7.BTC Miners Dept-to-Equity RartioCore Scientific was $1.3 billion in debt as of 30 September 2022, ultimately leading to a bankruptcy filing. On the other hand, Greenidge and Stronghold decided to restructure their current liabilities. The total debt among the ten miners analyzed by Luxor reached nearly $3.5 billion.Will 2023 bring more debt and bankruptcies? According to Brooks, it “can most
certainly be expected in the mining industry this year, particularly if the
prices of BTC and other PoW-based currencies drop even further.””Any significant
reduction in energy prices is not apparent and conversion to a more sustainable
and cost-effective energy source, where possible, would take time and be
costly. Many miners are already operating near or below break-even levels, so
their survival until any significant price bounce must be in doubt. Any further
increase in cost or reductions in revenues will accelerate the shutting down of
those in the weakest positions,” Brooks added.Significant Losses of Bitcoin Mining CompaniesAlthough the largest publicly traded mining companies have not yet released their reports for the fourth quarter and the entire year of 2022, the most recent trading updates and third-quarter reports showed a significant deterioration in the industry’s health.Canaan Inc. (NASDAQ:CAN), a cryptocurrency mining hardware manufacturer, reported a significant drop in revenue and net income in November. During the three-month period that ended on 30 September 2022, the computing solutions provider achieved a revenue of $137.5 million, which is 26% lower than in 2021. On top of that, net income slid 90% quarter-over-quarter to $8.6 million.Bitfarms (NASDAQ:BITF), a cryptocurrency mining company, reported a decline in revenue in the same quarter, despite rising BTC production. The company mined 1,515 BTC in the third quarter, nearly 500 more than a year earlier. Argo Blockchain found itself on the brink of bankruptcy
Bankruptcy
Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the courts. Bankruptcy can only occur with a court filing. Since bankruptcy is a legal state, once the petition is filed with the appropriate court, local and state laws vary greatly. Different Kinds of Bankruptcy In the US, these legalities are referred to as Chapters 7 and 11, 12, and 13. Chapter 7 is a liquidation procedure, where all assets are sold, and the court oversees the distribution of the money to creditors based on their standing. Both businesses and individuals can file for chapter 7. Chapter 11 is a reorganization process where businesses are allowed to freeze their debts and continue to operate. In contrast, a method and procedure are negotiated through the courts to satisfy the obligations of the company. Chapter 13 is called a wage earner plan and helps people attempt to restructure their debts to repay their debts. This can include some debt forgiveness by creditors or reduced interest rates or balances. Not all private persons are eligible for Chapter 13, high amounts of debt don’t qualify, and the person must file Chapter 11 or 7. Most individuals choose Chapter 13 over Chapter 11 or Chapter 7 because it aids them in avoiding foreclosure on their residence. The filing of bankruptcy is considered a last resort when businesses and persons have not been able to negotiate terms directly with their creditors.
Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the courts. Bankruptcy can only occur with a court filing. Since bankruptcy is a legal state, once the petition is filed with the appropriate court, local and state laws vary greatly. Different Kinds of Bankruptcy In the US, these legalities are referred to as Chapters 7 and 11, 12, and 13. Chapter 7 is a liquidation procedure, where all assets are sold, and the court oversees the distribution of the money to creditors based on their standing. Both businesses and individuals can file for chapter 7. Chapter 11 is a reorganization process where businesses are allowed to freeze their debts and continue to operate. In contrast, a method and procedure are negotiated through the courts to satisfy the obligations of the company. Chapter 13 is called a wage earner plan and helps people attempt to restructure their debts to repay their debts. This can include some debt forgiveness by creditors or reduced interest rates or balances. Not all private persons are eligible for Chapter 13, high amounts of debt don’t qualify, and the person must file Chapter 11 or 7. Most individuals choose Chapter 13 over Chapter 11 or Chapter 7 because it aids them in avoiding foreclosure on their residence. The filing of bankruptcy is considered a last resort when businesses and persons have not been able to negotiate terms directly with their creditors.
Read this Term but it was rescued by a strategic deal with Galaxy Digital Holdings, Ltd, a financial firm focused on digital assets and owned by Mike Novogratz.Bitcoin Network Difficulty Keeps GrowingDespite the decline in profitability, the BTC price and the valuation of mining the Bitcoin network difficulty has continued to rise throughout 2022. It clearly shows that despite the harsh conditions, the industry’s competition has constantly been increasing.Bitcoin Network Mining DifficultyAt the beginning of 2022, it took 24 trillion hashes (TH) to generate a brand new Bitcoin, while 12 months later, the indicator reached a new all-time high of 37 TH. Since then, the difficulty of mining has decreased slightly to 35 TH but remains in the range of record highs. Bitcoin, the oldest and largest cryptocurrency, closed last year with a loss of more than 60%. Additionally, the mining industry suffered from BTC’s sharp price declines, with revenues falling 37.5% in 2022 to $9.55 billion.According to Glassnode data, mining revenues stood at $15.3 billion in 2021. However, the high-profile collapse of the TerraUSD ecosystem in May and the FTX crypto exchange in November negatively affected the industry as a whole.Moreover, rising interest rates worldwide have increased pressure on risk assets, including equities. Cryptocurrencies, which are highly correlated with the stock market, have also begun to lose, negatively affecting the condition of digital assets mining companies.The miners’ daily revenue index reached a record high of $63 million in November 2021. However, by the end of 2022, it was at only $16 million, recording a very dynamic depreciation. Keep Reading Doug BrooksAccording to Doug Brooks, a Senior Advisor at XinFin Foundation, there are three main drivers for the strong decline in revenues: large increase in energy prices, lower value of Proof of Work currencies like Bitcoin and rising competition.”There are more miners than ever now, some
are even publicly listed companies, so there is less bounty for each miner
since the pot size is limited,” Brooks commented. BTC Miners’ Debts GrowAs revenues and profitability declined, Bitcoin miners found it increasingly difficult to repay their liabilities. According to Luxor data, the debt-to-equity ratio has tripled for many popular and publicly listed mining companies.For Core Scientific, one of the BTC miners from Wall Street, the ratio reached 26.7. In addition, Argo Blockchain (NASDAQ:ARBK), one of the world’s largest miners, increased its debt, with the debt-to-equity ratio jumping to 8.7.BTC Miners Dept-to-Equity RartioCore Scientific was $1.3 billion in debt as of 30 September 2022, ultimately leading to a bankruptcy filing. On the other hand, Greenidge and Stronghold decided to restructure their current liabilities. The total debt among the ten miners analyzed by Luxor reached nearly $3.5 billion.Will 2023 bring more debt and bankruptcies? According to Brooks, it “can most
certainly be expected in the mining industry this year, particularly if the
prices of BTC and other PoW-based currencies drop even further.””Any significant
reduction in energy prices is not apparent and conversion to a more sustainable
and cost-effective energy source, where possible, would take time and be
costly. Many miners are already operating near or below break-even levels, so
their survival until any significant price bounce must be in doubt. Any further
increase in cost or reductions in revenues will accelerate the shutting down of
those in the weakest positions,” Brooks added.Significant Losses of Bitcoin Mining CompaniesAlthough the largest publicly traded mining companies have not yet released their reports for the fourth quarter and the entire year of 2022, the most recent trading updates and third-quarter reports showed a significant deterioration in the industry’s health.Canaan Inc. (NASDAQ:CAN), a cryptocurrency mining hardware manufacturer, reported a significant drop in revenue and net income in November. During the three-month period that ended on 30 September 2022, the computing solutions provider achieved a revenue of $137.5 million, which is 26% lower than in 2021. On top of that, net income slid 90% quarter-over-quarter to $8.6 million.Bitfarms (NASDAQ:BITF), a cryptocurrency mining company, reported a decline in revenue in the same quarter, despite rising BTC production. The company mined 1,515 BTC in the third quarter, nearly 500 more than a year earlier. Argo Blockchain found itself on the brink of bankruptcy
Bankruptcy
Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the courts. Bankruptcy can only occur with a court filing. Since bankruptcy is a legal state, once the petition is filed with the appropriate court, local and state laws vary greatly. Different Kinds of Bankruptcy In the US, these legalities are referred to as Chapters 7 and 11, 12, and 13. Chapter 7 is a liquidation procedure, where all assets are sold, and the court oversees the distribution of the money to creditors based on their standing. Both businesses and individuals can file for chapter 7. Chapter 11 is a reorganization process where businesses are allowed to freeze their debts and continue to operate. In contrast, a method and procedure are negotiated through the courts to satisfy the obligations of the company. Chapter 13 is called a wage earner plan and helps people attempt to restructure their debts to repay their debts. This can include some debt forgiveness by creditors or reduced interest rates or balances. Not all private persons are eligible for Chapter 13, high amounts of debt don’t qualify, and the person must file Chapter 11 or 7. Most individuals choose Chapter 13 over Chapter 11 or Chapter 7 because it aids them in avoiding foreclosure on their residence. The filing of bankruptcy is considered a last resort when businesses and persons have not been able to negotiate terms directly with their creditors.
Bankruptcy or insolvency constitutes a legal term and refers to being unable to repay debts. A business and a person can declare bankruptcy. When a person or company claims bankruptcy, it is described as a voluntary bankruptcy, and when your debtors force you into bankruptcy, it is referred to as involuntary. A voluntary bankruptcy occurs when the debtor or borrower, the party that owes the money files with the courts. Involuntary bankruptcy happens when your credits file a petition with the courts. Bankruptcy can only occur with a court filing. Since bankruptcy is a legal state, once the petition is filed with the appropriate court, local and state laws vary greatly. Different Kinds of Bankruptcy In the US, these legalities are referred to as Chapters 7 and 11, 12, and 13. Chapter 7 is a liquidation procedure, where all assets are sold, and the court oversees the distribution of the money to creditors based on their standing. Both businesses and individuals can file for chapter 7. Chapter 11 is a reorganization process where businesses are allowed to freeze their debts and continue to operate. In contrast, a method and procedure are negotiated through the courts to satisfy the obligations of the company. Chapter 13 is called a wage earner plan and helps people attempt to restructure their debts to repay their debts. This can include some debt forgiveness by creditors or reduced interest rates or balances. Not all private persons are eligible for Chapter 13, high amounts of debt don’t qualify, and the person must file Chapter 11 or 7. Most individuals choose Chapter 13 over Chapter 11 or Chapter 7 because it aids them in avoiding foreclosure on their residence. The filing of bankruptcy is considered a last resort when businesses and persons have not been able to negotiate terms directly with their creditors.
Read this Term but it was rescued by a strategic deal with Galaxy Digital Holdings, Ltd, a financial firm focused on digital assets and owned by Mike Novogratz.Bitcoin Network Difficulty Keeps GrowingDespite the decline in profitability, the BTC price and the valuation of mining the Bitcoin network difficulty has continued to rise throughout 2022. It clearly shows that despite the harsh conditions, the industry’s competition has constantly been increasing.Bitcoin Network Mining DifficultyAt the beginning of 2022, it took 24 trillion hashes (TH) to generate a brand new Bitcoin, while 12 months later, the indicator reached a new all-time high of 37 TH. Since then, the difficulty of mining has decreased slightly to 35 TH but remains in the range of record highs.