Robert Steinadler, 2 months ago

Bitcoin miners in trouble: $750 million are on their way to save them

Bitcoin miners face dire times and consequences. Ever since Bitcoin dropped below $20.000 this year many of them start to face serious liquidity problems. The equipment, facilities, personnel, and energy costs are still demanding, and at the same time, they lost more than half of the revenue that they had at the beginning of this year. Some companies had to quit their operations while others raised more capital to continue.

How are the miners doing, will they continue and who is going to come to their rescue?

Binance pool offers a $500 million lending program

Binance runs one of the largest mining pools in the industry and announced to start $500 million lending program. While this sounds like a great opportunity to come to the rescue of struggling mining companies there are conditions that need to be met:

  • Loan is bound to an 18 to 24-month term
  • Interest rates need to be paid ranging from 5% to 10%
  • Applicants need to offer securities, either physical or digital assets

This clearly shows that the deal is a double-edged sword. On the one hand, Binance is offering needed liquidity and on the other hand, it seems that they are going to secure the assets of mining companies in case they should fail to pay back their loans.

Binance pool is not the only company that is offering a deal in desperate times. Bitdeer Technologies led by Jihan Wu pledged $50 million to buy assets from miners to help them out and announced that they are seeking to bring investors in for another $200 million.

Why are miners so desperate?

The network hashrate and difficulty continue to rise, which correctly leads to the conclusion that the Bitcoin network is doing great. The downside is that those mining companies that are already struggling are competing with rising difficulty, but at the same time have a lack of liquidity to buy new equipment or compensate for rising energy costs.

Poolin had issues paying out miners from its inbuild wallet and other companies had to shut down facilities or close the for good.

One thing that could save the miners once and for all is a rising Bitcoin price. With a recession in Europe and the US, it remains to be seen if Bitcoin is capable to disconnect from the correlation with stocks. It is this correlation that leads many analysts to the belief that Bitcoin could also touch new lows hand in hand with the stock market.

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