In the lead-up to the cryptocurrency bull market, publicly traded Bitcoin (BTC) miners took on debt totaling more than $4 billion, according to a recent report by Hash Rate Index. Industry rushed frantically to buy Bitcoin application-specific integrated circuit miners on easy credit, mesmerized by rising prices.
The year 2022, however, turned out to be incredibly challenging for sector players due to the current environment, which includes the collapse of the Bitcoin price, soaring electricity costs, decreased market pricing for mining rigs, and record-level mining difficulty. However, some people are doing a better job of hanging on.
Top 10 publicly-traded Bitcoin miners by liabilities | Source: Hashrate Index
On January 3, Bitfarms revealed that it had sold 1,755 BTC for a total of $29.9 million during the month of December 2022. The company then used this money to pay off $2.0 million in equipment-related debt as well as $16.5 million in its BTC-backed facility.
Additionally, Bitfarms was able to renegotiate miner purchase agreements, which resulted in the penalty-free extinguishment of $45.4 million and the creation of a $22.4 million credit for pre-paid pre-paid deposits to be applied against subsequent purchase agreements. In total, the company mined 5,167 BTC ($86.1 million at the time of publication) in 2022, and at the end of the year, it still owed $47.0 million in debt.
The exchange agreement to convert $17.9 million of its debt into preferred stock with a $23.1 million face value was announced by Stronghold Digital Mining the same day. The common stock (with negligible par value) would be convertible into the preferred stock at a conversion price of $0.40 per share, which is close to the stock’s current market value of $0.44. The preferred stock would not pay interest or dividends.
Not every Bitcoin miner adopted expansion plans backed by credit. On January 3, Digihost revealed a 60% year-over-year rise in BTC production. The business claimed that its only debt is a $934,500 vendor-take-back mortgage on a site in Alabama. Additionally, German Bitcoin miner Northern Data stated that the company has no debt and anticipated $204 million in income for 2022 in a previous story from Cointelegraph on December 21.