Public Bitcoin (BTC) mining companies have had it very rough this year and it did not get any better in the end.
The industry is currently encumbered with a huge debt of $4 billion after undertaking massive loans in the bullish year of 2021 compared to a bearish 2022 market. According to BTC mining data analytics by Hashrate Index, the top 10 mining companies in the industry collectively owe $2.6 billion.
Out of this $2.6 billion, Core Scientific which filed for bankruptcy in a court in Texas has almost $1.3 billion in debt as of September 30th and is the biggest debtor.
Per a published statement by Hashrate Index, “Such an enormous debt load requires tens of millions in monthly debt service payments that the company has been unable to pay in recent months as its cash flows have evaporated in tandem with the falling bitcoin price and rising electricity prices.”
Marathon Digital which claims to have the second largest Bitcoin holding is also the second biggest debtor.
The crypto mining giant has $850 million in liabilities most of which are in convertible notes meaning that there may be no monthly debt service payments. Instead, holders get the option to convert them into stock making it an easy debt to service. As it stands, Marathon Digital Holdings may not be filing for bankruptcy soon.
The third largest debtor is Greenidge, the BTC miner that recently inked a deal with fintech firm NYDIG to restructure its $74 million debt. The Connecticut-headquartered BTC miner has $218 million in debt but is in a restructuring process already. Many other miners are faced with the same situation and may likely file for bankruptcy in the coming year.
Bitcoin Miners’ Debt-to-Equity Ratio
In relation to their equity, most public Bitcoin mining facilities have a high debt ratio which goes to show a high level of risk.
After considering the debt-to-equity ratio, Hashrate Index said that bankrupt Core Scientific has a ratio of 26.7 while Greenidge and Stronghold have 18 and 11.1 respectively. The list continues to grow with almost half of the public BTC miners with a debt-to-equity ratio higher than 2, indicating a huge risk.