An analysis of public Bitcoin mining companies by the Hashrate Index revealed that they owe more than $4 billion. The largest of them has already filed for bankruptcy due to its unmanageable debt load.
On December 23rd, the Bitcoin mining analyst published a research report detailing the debt burdens of public miners and outlining who owes the most money.
Publicly-traded mining companies that once benefited from high profits and strong cash flow have now been doomed by their missteps. Their debts have increased tenfold as they struggle to stay afloat – instead of paying down debt, they are forced to restructure.
These restructurings typically turn debt into almost worthless equity, meaning both equity and debt holders suffer massive losses.
The report also asserts that there will probably be additional restructurings and maybe even bankruptcies in the future because the sector has unsustainably high debt levels. However, “some public miners barely have any debt.”
Bitcoin Miner Core Scientific In Led With $1.3B
As expected, the report discloses that Core Scientific, the largest publicly traded bitcoin miner by hashrate, has the highest debt, with $1.3 billion in liabilities listed on its financial sheet as of September 30th.
Such a heavy debt burden leaves little else for the company to spend its money on besides paying off its monthly creditors. Without being able to do so, it was forced to declare bankruptcy after having accumulated such large amounts of debt all at once.
Marathon, with $851 million in obligations, is the second-largest creditor. Greenidge is the third-biggest debtor with $218 million but is in a restructuring procedure that might significantly lower its debt.
According to the report, debt-to-equity ratios of two or more are seen as dangerous in most sectors, but in the infamously unstable bitcoin mining industry, it should ideally be far lower.
The highest debt-to-equity ratio among publicly traded miners is Core Scientific’s 26.7, which is hardly surprising given its huge liabilities.
Nevertheless, a significantly high debt-to-equity ratio of 1.8, compared to most other industries, is achieved by the whole bitcoin mining industry, which has total liabilities of $4 billion and equity of $2.2 billion.
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