Mining
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The vast majority of public mining companies have reported retained losses on their balance sheets despite a strong 2021. These results were obtained by Arcane Research analysts.
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The specialists studied the financial statements of Argo Blockchain, Bitfarms, CleanSpark, Stronghold, Hut 8 Mining, Marathon Digital Holdings, Riot Blockchain, Core Scientific.
They found that only the first had retained earnings of $26 million, while the others on this list are retained losses ranging from $137 million to $1.3 billion.
Data: Arcane Research.
Core Scientific’s $1.3B Retained Loss Driven by Negative Revaluation goodwill from the acquisition of BlockCap in July 2021 in the amount of $788 million. The identifiable net assets of the latter at the time of the transaction were $142 million, while the acquisition price was $1.2 billion.
In other words, most on this list have “lost money over the years.” Experts attributed the situation to high administrative costs, unsuccessful investments in the first cryptocurrency, and excessive expansion during the bull market in 2021.
Companies failed to benefit from the favorable environment last year, when at its peak, the margin from bitcoin mining reached 1260%. Now the indicator has decreased to 85%, but it should cover, among other things, operating expenses in the form of depreciation of equipment and salaries.
“This should be a warning that costs could get out of hand in some of these companies. Adopting proper risk management strategies and reducing administrative costs should be given priority,” experts suggested.
Recall that in September, the mining company and provider of infrastructure solutions for cloud mining Compute North filed for bankruptcy.
In April, Arcane Research analysts noted that the fall in the price of bitcoin and the growth of the hash rate will put pressure on the profitability of cryptocurrency mining.
In June, experts stated that mining profitability had fallen to 2020 levels.
Some companies have been forced to cut bitcoin reserves. In July, the trend continued. The situation was exacerbated by the heat wave in Texas, which led to peak electricity consumption and a surge in prices, forcing companies to temporarily close operations.
In September, Arcane Research concluded that despite adverse market conditions, public companies in the industry remain financially sound.
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