Bloomberg reported on Friday that Bitcoin’s drop is making it more difficult for some miners to repay up to $4 billion in equipment-backed loans.
A growing number of loans are underwater, according to analysts, since the value of many mining rigs accepted as collateral by lenders has dropped along with the price of Bitcoin, according to a report. Ethan Vera, co-founder of the Seattle-based mining business Luxor Technologies, estimated that there were as much as $4 billion in machine-backed loans.
According to the article, few miners have failed thus far, but others have liquidated Bitcoin reserves, putting more pressure on prices. If lenders begin to sell repossessed mining rigs, the cost of equipment might decrease much more.
“Bitcoin miners are suffering,” said Luka Jankovic, head of loans at Galaxy Digital, in an interview with Bloomberg. “Machine values have dropped and are still in the price-discovery phase, which is exacerbated by unpredictable energy costs and restricted rack space availability.”
This may not be the case for all of the major mining corporations, despite the fact that some still enjoy healthy profit margins. Wilfred Daye, chief executive officer of Securitize Capital, told Bloomberg that total expenditures for some miners may have surpassed $20,000, which is around the current price of Bitcoin.
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