The majority of the Bitcoin mining companies are under high stressed situation for their loan repayment because of the downfall in the price of Bitcoin.
Since December 2021, the Crypto market saw a huge downfall in the price of crypto assets. Bitcoin saw a downfall from $46k to $18k, where it saw the break of its strongest buy support wall of $20k. Under extreme market conditions, Bitcoin inclined majority of the businesses facedp significant shake in their business activity.
Recently Bloomberg published a report regarding the issues with the Bitcoin miners, which are running mining rigs that were purchased on behalf of the Bitcoin collateral. Due to the downfall in Bitcoin value to $20k, the majority of the mining companies are not able to pay loans to the lenders.
The report also noted that not all the Bitcoin mining companies are in this situation because there are many high-level Bitcoin mining companies and all the companies are not running their business on loan-backed ideology. Even at the price of $20k per BTC, many big bitcoin mining companies are making huge profits.
Ethan Vera, the co-founder of Seattle-based Bitcoin mining company Luxor Technologies, reportedly said that around $4 billion in loans are backing the mining rigs and this figure is really big for this industry.
Luka Jankovic, the head of lending at Galaxy Digital, said that “Machine values have plummeted and are still in price discovery mode, which is compounded by volatile energy prices and limited supply for rack space.” Galaxy Digital head noted that some companies are grabbing significant margins at this price but it is not true for all companies.
Extreme market conditions & better results
Downfall in the price of crypto assets and outflow of huge money from this crypto market showed a perfect crystal clear mirror to those companies, which were either not running their business on a perfect model or not managing their work under the limitations to ensure the safety from every side.