A recent flurry of news reports about major cryptocurrency players filing for bankruptcy could have adverse consequences for the industry, which is already grappling with pricing uncertainty. These stories could indicate that the cryptocurrency price rout could weigh heavily on businesses.
Bankruptcies in industry
The sector recently received some shocking news stories of Bitcoin BTC/USD minor Core Scientific Inc. CORZ warning that it will not be able to pay its debt, causing the company’s shares to plummet 76%.
According a filing with the Securities and Exchange Commission (SEC), Core Scientific will not be able to make debt payments due in October and November. The company said it was exploring alternatives to its capital structure and working with financial and legal advisers, but noted it may have to file for bankruptcy.
The industry was hit with another such news story when Compute North Holdings Inc., one of the largest crypto-mining data center operators, announced on September 22 that it had filed for bankruptcy and CEO Dave Perrill had resigned.
As if that weren’t enough, Iris Energy Limited IREN – an owner and operator of proprietary institutional-grade Bitcoin mining data centers – Underline some recourse equipment funding issues in its Nov. 2 update on Bitmain funding and prepayment.
“Limited-recourse equipment financing agreements have been a recent concern for us. We remain committed to exploring a way to allow the lender to recoup their capital investment,” said the co-founder and co-CEO of Iris Energy, Daniel Roberts.
“However, we are also aware of the current market and that these agreements have been deliberately structured to minimize any potential impact on the whole group during a prolonged market downturn.”
Bitcoin mining companies such as Core Scientific, Compute North, Riot Blockchain Inc. RIOT and CleanSpark Inc. CLSK often go into debt to stay competitive in a business with huge capital expenditures in the form of electricity, plant and mining equipment costs.
Some companies, like Iris Energy, Compute North, and Core Scientific, are running out of cash due to rising electricity costs and falling cryptocurrency prices. These bankruptcy stories seem to underscore that there may be an extreme shortage of financial resources and infrastructure in the cryptocurrency mining sector.
Positives in the cryptomining industry?
With a growing undersupply of crypto-mining infrastructure, Mawson Infrastructure Group Inc.it is MIGI large-scale excess infrastructure capacity could give the industry some hope.
mawson is a digital infrastructure provider with multiple operations across the United States and Australia. The company’s vertical integration model is based on a long-term strategy to promote the global transition to the new digital economy.
Mawson says it combines sustainable energy infrastructure with next-generation mobile data center (MDC) solutions, enabling low-cost bitcoin production and on-demand deployment of infrastructure assets.
With a strong focus on shareholder returns and an aligned board and management, Mawson could become a global environmental, social and governance (ESG) leader focused on bitcoin mining and digital infrastructure, given its large-scale excess capacity.
While other companies struggled to stay afloat, Mawson may have recently caught the industry’s attention when she announcement its growth and expansion strategies on October 18.
The company revealed that it is moving its application-specific integrated circuit (ASIC) servers from Georgia to Pennsylvania while continuing to expand and develop facilities in Pennsylvania – Midland, 100 megawatts (MW) and Sharon, 120MW.
Mawson also said it will secure an additional large-scale site for long-term digital infrastructure capacity, explore opportunities to expand its digital mining business, and develop strategic partnerships and customer relationships and the communities.
In June, the company became a 33% shareholder of Tasmania Data Infrastructure Pty Ltd. (TDI). TDI has developed a large-scale, 100% renewable energy Bitcoin mining facility at the Que River mine site in Tasmania, Australia, with up to 35 megawatts of energy infrastructure available for mining. Bitcoin.
“The group’s residual infrastructure portfolio of 350MW is capable of accommodating up to 12 EH.2s, ensuring that Mawson continues to have substantial expansion capacity for 2023. Our focus on facilities at geographic proximity allows us to ensure maximum operational efficiency in the future,” CEO James Manning said in a press release.
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investment advice.
Featured photo sourced from Pixabay