Multiple Bitcoin mining companies have filed for bankruptcy in the cryptocurrency winter of 2022, but Asher Genoot, the CEO of listed mining company Hut 8, firmly believes that the situation will be different after the upcoming Bitcoin halving.
Genoot stated in an interview with Bloomberg on Wednesday that the main cause of the bankruptcy of mining companies in 2022 was the excessively high leverage of the enterprises and the unpreparedness for the rising energy costs.
Several Bitcoin mining companies, such as Compute North, Celsius Mining, and Core Scientific, have filed for bankruptcy in the cryptocurrency winter of 2022. However, Genoot stated that Bitcoin mining companies have generally relied less on leverage since then and have relied more on debt-free capital from the stock market to develop their businesses.
Genoot expects to see an increase in merger and acquisition activities among smaller Bitcoin mining companies, which he believes will significantly reduce the bankruptcy rate. He explained that Bitcoin may need to pull back to $30,000 or $40,000 before a significant amount of merger and acquisition activities or “distressed opportunities” emerge.
Genoot also stated that after the Bitcoin halving, investors will flock to “large-scale operators with the lowest marginal production costs”. According to data from CoinMarketCap, at the time of this article’s publication, there are only 17 days left until the Bitcoin mining reward halving.
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Related reports: “Bitcoin miners’ income reaches $2 billion in March, hitting a historical high”, “Bitcoin halving prompts a large number of old mining machines to move out of the United States, primarily to Africa and South America”, “Cantor Fitzgerald report: 11 listed mining companies may struggle to profit from mining business after Bitcoin halving”.
