Major Bitcoin miners lost over $1 billion during crypto crash
The three largest US-listed Bitcoin miners lost more than $1 billion in the second quarter after taking a series of write-downs spurred by the collapse of cryptocurrency prices.
Core Scientific Inc., Marathon Digital Holdings Inc. and Riot Blockchain Inc. posted net losses of $862 million, $192 million and $366 million, respectively, in the three months ended June 30, recent quarterly results show. Other significant miners such as Bitfarms Ltd. and Greenidge Generation Holdings Inc., which reported results Monday, were also forced to write down the value of their holdings in the wake of the nearly 60% drop in the price of Bitcoin during the quarter.
While the shares of crypto mining companies have enjoyed a respite in recent weeks, they are still deep in the red this year. The miners had to shift from their Bitcoin hoarding positions and sell coins as they struggled to repay debt and cover operating costs in the last quarter. It continued into the third quarter.
“Public miners are still dumping their Bitcoin holdings at a faster rate than the production rate,” Jarand Mellerud, an analyst at Arcane Crypto, wrote in a research note. “Public miners sold 6,200 coins in July, making July the second highest BTC sales month of 2022.”
The miners were not the only industry participants to take a significant hit last quarter. Coinbase Global Inc., the largest US crypto exchange, posted a loss of $1.1 billion, while MicroStrategy Inc. also had a net loss of more than $1 billion.
Top public miners sold 14,600 coins in June, while producing 3,900, Mellerud said. Core Scientific sold nearly 80% of its coins to cover operating costs and fund expansion in June. Bitfarms sold almost half of its holdings to pay off a $100 million loan in the same month.
The miners take on more debt and sell their holdings and mining rigs to stay afloat. Marathon added an additional $100 million term loan with crypto-friendly bank Silvergate Capital Corp., while refinancing its existing $100 million line of credit in July. The miner also sold the mining rigs for $58 million. Core Scientific has entered into a $100 million purchase agreement with B. Riley Principal Capital II.
The US Securities and Exchange Commission has told public companies with large Bitcoin holdings on their balance sheets that they cannot remove the price swings while disclosing results. The losses are not realized unless there is an actual sale of tokens.
-With assistance from Vildana Hajric.
This article was provided by Bloomberg News.
