Cryptocurrency-related lending has recently become a black stain on the industry, with low bitcoin prices putting billions in mining loans under stress, according to a recent report. The report, which quotes Ethan Vera, co-founder of mining company Luxor Technologies, states that the roughly $4 billion in loans backed by crypto mining rigs are at very close risk of default.
Analysts say miners are “nervous about their loan books”
According to a Bloombergreportanalysts say many loans backed by mining machines are underwater.
Luxor’s Ethan Vera estimates that about $4 billion in loans backed by mining rigs are under stress.” They are nervous about the loan book, especially those with high collateral ratios,” Vera explained to Bloomberg’s David Pan.
Using currentstatisticsfrom asicminervalue.com , only 14 SHA256-based mining rigs, using the BTCexchange rate, at an electricity cost of about $0.05 per kilowatt-hour (kWh) profit; the top mining machines manufactured by Bitmain and Microbt collect $2 to about $4.50 per day, at an electricity cost of about $0.05 per kWh.
The report notes that miners are sellingBTCto bolster operating costs, highlighting that in May, Core Scientific Inc. sold more than 2,000BTCsold to cover operating expenses.
“Bitcoin miners, broadly speaking, are feeling the pain,” Luka Yankovic, head of financing at Galaxy Digital, detailed in the report.” Many operations have become net IRR negative at this level. Machine values have plummeted and are still in price discovery mode, which is exacerbated by volatile energy prices and limited supply of rack space,” Jankovic added.
JP Morgan analysts say bitcoin miners will continue to put pressure on prices
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Traditionally, during bear markets, bitcoin miners are further pressure on the price. Another report quoted Nikolaos Panigirtzoglou, an analyst at JPMorgan,explaining that bitcoin miners who need to sell will continue to focus on the current downward pressure affecting themarketThe BTCmarket has been on the rise recently. recently.
Panigirzoglou and a group of JP Morgan strategists believe that undisclosed miners may have sold a large share of their block subsidies to help with operational costs. Manyreportsshowed that miners had sold large amounts ofBTCsince February 2022.
“Bitcoin miners have become net distributors since the recent sell-off,” the team of on-chain analysts at Glassnodedetailedon June 2.” Miners’ balances have recently declined at a rate of 5k to 8kBTCper month ($150M to $240M at $30k BTC).”
Over the past few weeks, a handful of crypto lenders have also been under severe stress, with some dealing with liquidation. Crypto lender Celsius has been under scrutiny by the crypto community for alleged liquidation and rumors of restructuring and insolvency. Loans related to
70} BTCmining industry may force miners to sell even moreBTCif prices fall. BTCwill be forced to sell if prices drop below today’s current exchange rate.
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