Key Points:
Because they offered set charges and took on real-time electricity prices, hosting companies were found to be the most severely impacted in the market. Core Scientific and Compute North, two of the biggest, have both declared bankruptcy.
“We may see hosting providers push for pass through power contracts plus a spread, while also offering clients certain revenue curtailment benefits,” Galaxy said.
Notably, Core Scientific and Celsius Mining argued over the details of their contracts about increases in power costs; the former ultimately received permission to shut down 37,000 Celsius mining rigs.
In addition, the network hash rate will conclude the year up 23% at 325 EH/s, the company said in its mining year-end report.
Because of the decline in bitcoin prices and the rise in energy prices, which have reduced margins, miners have been compelled to liquidate their assets and declare bankruptcy.
“The bitcoin mining industry is currently going through a purge of all of the excess and misallocations of capital that supported weak business models during the bull market of 2021,” the bank said. “Miners ended 2022 in survival mode, setting the stage for more turbulent times ahead in 2023.”
While over $1.1 billion in distressed mining funds has been announced, miners will still struggle to have the same access to funding that was available in 2021 and 2022. The structure of machine-backed loans is bound to change and going forward those loans will have to “include a better mechanism for determining monthly payment amounts based on market conditions.”
In 2022, miners defaulted on $277mm of ASIC-backed loans, handing back over 11.59 EH of machines to lenders, Galaxy estimated.
“Going forward, it is essential that miners develop a treasury management strategy that aligns with their future cash needs,” Galaxy said. However, it added, “In 2023, we do not anticipate the same level of sell pressure coming from miners.”
The firm notes that more than 1 GW of hosting capacity entered bankruptcy in 2022.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.
Join us to keep track of news: https://linktr.ee/coincu
Website: coincu.com
Annie
Coincu News
Best Cryptos to Invest in December 2024: Qubetics surges past $2.6M, Solana’s whale pump ignites…
As Bitcoin reaches unprecedented heights and the market surges, he's highlighting five altcoins poised for…
With the crypto market reaching new peaks, many are eager to discover digital currencies poised…
XYZVerse, blending sports passion with meme energy, is set to make a significant impact, uniting…
Will Bitcoin Crash?" seems to be one of the most controversial questions, as the price…
There’s always that one coin people wish they hadn’t overlooked. For many, Cosmos ($ATOM) is…
This website uses cookies.