Fewer Bitcoin Mining Bankruptcies Predicted; Surge in Mergers Expected
Summary:
Hut 8 CEO Asher Gennot predicts fewer Bitcoin mining bankruptcies in the future compared to 2022, largely due to a decrease in overleveraging and higher volumes of debt-free capital. He expects a rise in mergers and acquisitions among smaller-scale Bitcoin miners. Gennot also discusses the approaching Bitcoin halving event and anticipates investors to turn towards large-scale producers with low production costs. Despite historical trends, Bitcoin prices have already hit new highs ahead of the halving, with experts attributing this to the launch of spot Bitcoin exchange-traded funds in the US.
In the years ahead, the number of Bitcoin (BTC) mining corporations declaring insolvency will be substantially lower than in 2022, according to Hut 8 CEO Asher Gennot. In a recent interview with Bloomberg, Gennot highlighted that a significant reason contributing to the 2022 bankruptcies was companies overstretched and ill-equipped to deal with escalating energy prices. In his words, excessive leverage in 2021 pushed many to bankruptcy in 2022 when Bitcoin values dipped and energy prices soared. Compute North, Celsius Mining, Core Scientific are some firms that sought bankruptcy protection amidst the crypto winter of 2022.
Gennot posits that Bitcoin miners have since shifted strategies, leaning towards less leverage and more use of debt-free capital from equity markets to expand their operations. He foresees a surge in consolidation and acquisitions among smaller Bitcoin miners, leading to significantly less bankruptcy. For a considerable amount of M&A or "distress opportunities" to occur, Bitcoin would likely have to fall back to $30k or $40k.
The anticipated Bitcoin halving event is due on April 20, upon reaching block 840,000. This will slash miner rewards from 6.25 BTC ($412,000) to 3.125 BTC ($211,000) at the current rate. Post-halving, Gennot anticipates a shift in investors favoring large-scale producers with the lowest production costs. This approach mirrors his actions last December when he formed US Bitcoin Corp (USBTC), merging it with Hut 8 Mining Corp's activities in an all-stock deal. This consolidation is now known as Hut 8 Corp, based in Miami, Florida, boasting over 9,100 Bitcoin valued at $600 million on its books.
Bitcoin is now priced at about $66,000, with the halving occurrence merely 17 days away. Historically, Bitcoin has established new records roughly six to twelve months post-halving, witnessed in 2012, 2016, and 2020. However, the recent weeks saw Bitcoin set a new record, outperforming its earlier top value of $68,990 on March 5, just 46 days ahead of the halving. Industry experts attribute this unusual and exceptional price movement to the recent roll-out of spot Bitcoin exchange-traded funds in the US.
Published At
4/3/2024 8:03:11 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.