Sun August 28, 2022 ▪ 6 p.m. ▪
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In the face of the cryptocurrency crisis, the major operating companies are stepping up efforts to cut spending. Since the energy consumption is enormous, some choose to partially stop their mining machines. In this sense, the miner Corz Scientific has distinguished itself in its data center in Texas by shutting down its machines. His bitcoin production therefore logically declined in July, forcing him to dive into his reserves to sell massively. In the end, the realized sale of Bitcoin remains more important than production.
What explains the decline in bitcoin mining?
If we take Corz Scientific’s mining operations in July, it’s only 1221 bitcoins (BTC) that the company was able to obtain. There, the dismantling had to be stopped several times at the request of authorities controlling the power grid in Texas, where the mining takes place. Core Scientific’s computing power is one of the greatest in the world. It’s no surprise that this infrastructure in Texas has put a heavy strain on the power grid.
the Miners on 180,000 servers only produced 1221 bitcoins but sold them in 1975 to increase capital and growth costs. Overall, Core Scientific raised $44 million, or $22,000 for each bitcoin sold. More specifically, some of that money was used to significantly increase the capacity of its database. Core Scientific used another portion of that money to pay Bitmain. In fact, Core Scientific ordered 100,000 mining rigs from this supplier last year.
Mining decline: Should we fear massive sales?
The bear market is not making mining the king of cryptocurrencies any easier. To stay alive, some companies continue to massively sell their bitcoin reserves. However, the question arises, does this not matter? It must be said that the current bear market in cryptocurrencies encourages this type of maneuver. Miners are massively selling their mined digital assets this year to cover expenses. Riot Blockchain (RIOT) for example, said it sold 275 bitcoins for $5.6 million in July.
We recall that last June, Core Scientific sold 7,202 bitcoins, raising approximately $167 million. The miner said he had less than $10 million in cash left over for the rigs, excluding shipping and duties. However, he still holds 1,205 bitcoins and has about $83 million in cash on his balance sheet.
This miner is a major player in the industry. Founded in 2017, Core Scientific has quickly become one of the largest bitcoin miners in the world. As of June 30, it already had 180,000 servers, or 10% of the world’s mining capacity. The company just announced that this deployment has increased to 195,000 mining servers. This whole device produces a hash rate of around 19.3 exahash per second. According to Core Scientific, it is the highest mining power in North America. Following this announcement, its shares rose 4%, which now puts the miner ahead of some of its direct competitors.
In short, miners resort to massive bitcoin selling to deal with bear markets. Core Scientific, for example, has no intention of stopping there. The miner announces its intention to sell the bitcoins it has mined to cover operating costs, fund its growth, repay its debt and maintain a reasonable level of liquidity. It is clear that if the bear market persists and production continues to fall, miners will no longer be satisfied with Bitcoins they have mined themselves, and that other solutions will have to be found.
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Cédrick Aimé, PhD student in finance law and experienced SEO web editor, is passionate about cryptocurrencies, trading, etc. Of course, thanks to his articles, he participates in the daily blockchain revolution for a better democratization of DeFi.
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