Public bitcoin miners in the US collectively owe more than $4 billion, according to data from Hashrate Index, with Core Scientific, Marathon and GreenRidge Generation being the largest debtors.
According to the data, the largest borrower is Core Scientific, which had liabilities of $1.3 billion as of September 30. The miner recently filed for bankruptcy. Its debt load requires monthly payments of crores to repay its loans.
This meant that even though the company had positive cash flow, it could not service its debt obligations due to the drop in bitcoin prices. Hence, the decision to file for bankruptcy.
Public bitcoin miners were responsible for 15% of BTC mined
Notably, Core Scientific is the public miner with the highest hash rate. Public miners were responsible for 15% of all bitcoin mining in 2022, and Core Scientific is responsible for a quarter of that. This shows how difficult this year has been for miners.
Meanwhile, Marathon is the second largest borrower with $851 million in debt. Fortunately, most of its loans are in convertible notes, which don’t require monthly service payments. This kept it in a better position and is not at risk of bankruptcy.
However, Greenridge Generation, the third largest borrower, is not so lucky. It has a debt of $ 218 million and is now on the verge of bankruptcy. It is trying to complete a debt restructuring deal that will reduce its debt, but will also see it transfer most of its hashrate to NYDIG.
Other public miners round out the top ten include TerraWulf, Norther Data, Argo, BitNile, Stronghold, Iris Energy and Bitfarms. They all have a debt of over $100 million.
Most miners have a high debt-to-equity ratio.
The biggest problem for public miners is not their debt but their debt-to-equity ratio. Generally, a debt-to-equity ratio of 2 or higher would be considered risky. Given the volatile nature of the crypto market, it should be less.
But the debt-to-equity ratio of most public miners is much higher. Core Scientific’s ratio is 26.7, GreenRidge 18.0, Citadel 11.1, Argo 8.7 and Cathedra 5.3. Of the 25 public bitcoin miners, more than half have a debt-to-equity ratio greater than 2.
Additionally, public miners have debt of $4 billion while equity is $2.2 billion, giving the debt-equity ratio of the entire sector at 1.8, which is relatively high. Although many miners are trying to restructure debt, the future still looks bleak.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.