Debts of mining companies can provoke a disaster in the crypto-market

  • 23:34 Dec 09, 2022
Debts of mining companies can provoke a disaster in the crypto-market

The situation for miners is getting more and more complicated. In an attempt to expand during the bull market, companies turned to loans secured by equipment and mined bitcoins. This can now have an extremely negative effect on the market. 

CleanSpark CEO Zach Bradford said that the market situation is close to panic. His company turned out to be one of the few that didn't make a huge commitment, so now the miner feels relatively stable. What cannot be said about the other participants? 

CelanSpark used a strategy whereby it sold 70% of the mined coins. Nuclear power was used for the work. Now, at a time of market decline, there is enough money to buy equipment, which is sold at a huge discount. Zach Bradford notes that the cost of the recently purchased devices is $1,500 apiece. A year ago, the same devices cost $13,000. 

Gusman Pintos, the co-founder of Luxor, believes that the problem with miners is that they have been expanding capacity, not for more mining, but to pump up their stock: 

The more machines a company has, the more coins it can mine. That makes its stock much more expensive amid the rise of BTC.

That all changed when cryptocurrency started falling and energy prices started rising. According to Pintos, this took the company by surprise: 

No one expected this to happen!

The more time passes, the harder it is to make predictions about the mining industry. The drop in the price of bitcoin and the huge supply of equipment puts companies in a difficult position, and their stock is heading toward zero. Nevertheless, some experts argue that this will eliminate weak and unpromising players from the industry.

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