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According to the Hashrate Index, public mining companies collectively owe more than $4 billion. The largest debt is due to Core Scientific, Marathon and Greenridge Generation.
Core Scientific company heads the list of debtors. As of September 30, its liabilities amounted to about $1.3 billion US dollars, and the debt load required payment of tens of millions monthly. Despite the positive balance, the firm was unable to fulfill its obligations due to the fall in the price of bitcoin and filed for bankruptcy.
Source: Hashrate Index
The share of public mining companies accounted for 15% of BTC production
In 2022, public miners accounted for 15% of the total bitcoin mining. The share of Core Scientific was about a quarter.
The second largest debtor was Marathon with a debt of $851 million. Fortunately, most of its debts are in convertible bonds, which do not require monthly maintenance payments. This puts the company in a better position.
However, the third largest debtor Greenridge Generation was not so lucky. Its debt is $218 million, and now it is on the verge of bankruptcy. The company is trying to complete a debt restructuring deal, but at the same time it will transfer most of its hashrate to NYDIG.
Other public miners, including Terawulf, Norther Data, Argo, BitNile, Stronghold, Iris Energy and Bitfarms, round out the top ten. All of them have debts of over $100 million.
The ratio of debt to equity of miners looks risky
The biggest problem for public miners is not debt, but its ratio to equity. A debt-to-capital ratio of 2 or more is considered risky. And taking into account the volatility of the cryptocurrency market, this indicator should be even lower.
However, most public miners have a much higher debt-to-capital ratio. At Core Scientific, this indicator is 26.7, at Greenridge — 18.0, at Stronghold — 11.1, at Argo — 8.7, and at Cathedra — 5.3. More than half of the 25 public bitcoin miners have a debt-to-equity ratio of more than 2.
In addition, since the debt of public miners is $4 billion, and the equity is $2.2 billion, the debt—to-equity ratio of the entire sector is 1.8. This is also a fairly high indicator. And although many companies are trying to restructure the debt, the future of bitcoin miners still looks bleak.
