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As profits dry up due to high interest rates and borrowing becomes more expensive, Bitcoin mining companies are selling more shares, one of the least attractive ways to raise money.
In July, Core Scientific Inc., one of the largest publicly traded miners in the US. Signed a $100 million joint stock purchase agreement with B. Riley's Principal Capital II. Australian miner Iris Energy Ltd. agreed in September to sell up to $100 million worth of stock to the same investment bank. London-based Argo Blockchain Plc decided to offer shares to investors at an undisclosed discount of $27 million earlier this month.
Bitcoin miners are faced with low bitcoin prices, rising energy costs and intense competition in the industry. During the cryptocurrency boom, these companies rushed to the stock market to raise money when investors expected the price of bitcoin to rise and publicly traded miners as an efficient way to invest in the industry. was considered.
Mining companies rushing to issue new shares to counter the ongoing collapse of digital assets are putting their shareholders at risk as their shares fall. Share prices of several major miners have fallen this year, with US-listed Core Scientific and Iris Energy and Argo Blockchain down at least 78% this year. Since its launch in February, the $2.35 million Valkyrie Bitcoin Miners ETF (ticker WGMI), which tracks several major public miners, has fallen 73 percent.
"While additional dilution is painful for investors, raising equity capital is the only way to fund miners to meet their financial obligations," said Ethan Vera, the service's chief operating officer. Luxor Crypto Mining Technology. "Another option is to stop selling activity, which could be just as or more damaging to shareholders."
The Valkyrie Bitcoin Miners ETF ($2.35 million) tracks several major public miners.
According to Daniel Frukin, head of research and content at crypto mining services firm Brains, other less attractive options for increasing net worth include selling bitcoins at a lower price or filing for bankruptcy. For example, Core Scientific has sold about 85% of its bitcoin holdings since the end of March, according to a September update. The company had $29.5 million in cash at the end of September, down 77 percent from $128.5 million at the end of the second quarter. The second quarter figures do not include $11.9 million in restricted cash.
The recent increase in mining difficulty, which measures the computing power of Bitcoin miners, is another blow to companies trying to tackle the current problem. High levels of computing power keep the mining income of already humble Bitcoin miners low. And the more mining power, the less each bitcoin earns.
Lender's stress
Some bitcoin miners have increased rig sales to help them weather the storm or at least reduce their debt. But many lending companies are under pressure to get their mining rigs out, as the price of these popular devices has fallen more than 80% since last November when bitcoin hit a record high of $69,000. From Luxor.
With bitcoin hovering around $20,000 since June, this is a serious threat to their lenders. Lenders include Celsius Networks Limited. And Asia's Babel Finance is struggling with liquidity issues exacerbated by the collapse of the cryptocurrency market earlier this year. Genesis, another major cryptocurrency that provides loans to Bitcoin miners, laid off 20% of its 260 workforce and sued its parent company for $1.2 billion.
"I don't see lenders eliminating completely, but many lenders are paying some attention to 'northern' miners, who may be willing to accept negative terms to avoid bankruptcy," Frumkin said.
Some miners are still turning to equity financing as some lenders have raised interest rates, said Matthew Kimmel, digital asset analyst at crypto research firm CoinShares.
Of course, not all miners who raise money from the stock market are happy.
Riot Blockchain Inc., another publicly traded U.S. bitcoin miner, is seeking approval from its shareholders to issue new shares in part to improve operations. He made the same complaint this summer. The company acquired more than 700 coins between March and September and had $270.5 million in cash at the end of the second quarter. Since the beginning of the year, however, the share has fallen by around 74%.
"Bitcoin miners need to raise capital to thrive in a bear market," said Jaran Maillard, cryptocurrency analyst at Hashrate Index. "Today, without raising capital, these companies will not be able to carry out their expansion plans, and some of the most indebted people could go bankrupt."
Green mining
In other parts of the world, such as Norway, green energy offers a way out of today's low mining profitability. Other clean energy projects are trying to solve this problem. One of the most popular today is IMPT (Impact Project).
IMPT is a highly innovative project that offers users multiple opportunities to buy or sell carbon credits on the IMPT.io marketplace. In this way, not only individuals, large corporations and corporations help to deal with the climate crisis.
Trading and buying carbon credits
Towards a more sustainable future
In the first 4 days of pre-sale, IMPT raised more than 5 million dollars
IMPT pre-sale has started and the project has raised more than 5 million dollars. Prices rise during the pre-sale, meaning early buyers get the best deals.
Despite the short sale to early adopters, IMPT is currently available in the presale, with IMPT tokens priced at just $0.018. For a total of 600,000,000 tokens in this round (3 billion IMPT is the maximum supply), an additional 660 million will be sold in the second round at $0.023, and another 540 million will be sold in the third and final round. Pre-sale level for $0.0280.
from -
- Pre-sale now live
- Doxxed professional team
- Industrial use cases - Carbon footprint compensation
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