Miners have accumulated billions of credits, and now there is nothing to pay with
A new threat has emerged in the cryptocurrency market. Mining companies have difficulties paying off previously taken loans secured by equipment in the amount of $ 4 billion. This is reported by Bloomberg. The risks for large cryptocurrency loans have increased significantly.
Due to the fact that the market is extremely volatile, classic loans for equipment upgrades are not available to everyone, they have high rates. Some lenders, such as Galaxy Digital, NYDIG, BlockFi Inc., began to take virtual coin mining equipment as collateral in addition to payments.
But now the provision of loans has turned out to be insufficient, since the equipment itself has become cheaper. At the moment, the loans secured by mining devices amount to approximately $ 4 billion.
Due to the fact that companies are selling Bitcoin reserves, prices are falling, and the cost of equipment is decreasing more and more. For example, the price of Bitmain S19 has fallen by almost 46 percent.
Companies such as Core Scientific Inc. were forced to sell 2,000 Bitcoins in mid-May in order to somehow reduce their costs, and Bitfarms Ltd had to liquidate at least 49% of the coins received, and all in order to pay off the loan to Galaxy Digital Ltd. According to information from Arcane Research, cryptocurrency mining firms were forced to sell 100 percent of the coins they received in May. Although at the beginning of this year, they sold on average no more than 30% of the BTC received. We have to sell equipment, coins to cover costs, pay off loans.
What will happen next? If the market situation does not improve in the coming months, and there are no fundamental factors for this yet, many companies will disappear. There is nothing wrong with this when viewed on a global scale. The market needs cleansing and the arrival of new players, and the fact that some participants will not survive the recession is not unusual.
A similar situation is developing in other sectors of the world economy. Many organizations could not survive the quarantine restrictions imposed 2 years ago, others appeared in their place. If the recession in the crypto market drags on for six months or a year, then only the most financially stable companies will survive, having a margin of safety and able to survive the crypto winter.
Author: Dan, analyst Сoin-signal.com Club Crypto News
https://coin-signal.com/cryptonews/miners-have-accumulated-billions-of-credits-and-now-there-is-nothing-to-pay-with/
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