Bitcoin Miners Deleverage, Scale Back as Crypto Winter Continues into 2023

tech.hindustantimes.com:

Cash-strapped Bitcoin miners are reducing loans and scaling back their operations as the crypto-mining industry continues to weather a plunge in the digital asset's price.

During the historic bull run in late 2021, miners raised billions of dollars in debt financing to fund their expanding operations. But since the crash early last year, publicly traded miners are refinancing and selling coin reserves as well as equity to repay loans and cover operational costs.

“Miners are trying to deleverage to avoid margin calls or an imminent liquidity crunch if Bitcoin drops below a certain price point,” Wolfie Zhao, an analyst at crypto-consulting firm BlocksBridge, said.

Miners like Marathon Digital Holdings Inc. have raised hundreds of millions of dollars in loans backed by the coin from crypto-friendly banks such as Silvergate Capital Corp., which has been reeling from the crypto industry meltdown.

Core Scientific Inc., the largest Bitcoin miner by computing power, was the first major public mining company to declare bankruptcy in December, citing falling Bitcoin prices and soaring energy costs for its cash-flow issues. The Austin, Texas-based company is trying to work out a plan to repay its creditors.

Last month, Marathon eliminated its $30 million revolver debt, increasing its unrestricted cash to over $100 million, according to BlocksBridge.

Money raised from debt financing by 15 major public mining companies has been shrinking since the first quarter of 2022, and for the first time in the third quarter it contracted $112.6 million, according to data compiled by BlocksBridge. That's compared to a total of $348 million and $188 million in the first and second quarters, respectively, said BlocksBridge. Overall, net spending on