There will be far fewer Bitcoin (BTC) mining firms filing for bankruptcy in the coming years than there were in 2022, says Hut 8 CEO Asher Gennot.
Speaking in an April 3 interview with Bloomberg, Genoot said that the main cause of bankruptcies in 2022 came from firms being overleveraged and unprepared for rising energy costs.
“A big area that led to a lot of bankruptcies in the mining sector and distressed assets was because of the leverage of 2021,” said Genoot.
“A lot of companies grew with that and that debt couldn't be serviced in 2022 when Bitcoin prices went down and energy prices went up.”
Compute North, Celsius Mining, and Core Scientific — which has since relisted on the NASDAQ — are among several of the Bitcoin miners that filed for bankruptcy during the crypto winter in 2022.
However, Genoot said that since then, Bitcoin miners have typically relied on less leverage and higher volumes of debt-free capital coming from equity markets to grow their businesses.
Genoot said he expects to see an uptick in mergers and acquisitions (M&A) activity among smaller-scale Bitcoin miners, something he predicts will contribute to a far lower rate of bankruptcies.
Bitcoin would likely need to retrace to $30,000 or $40,000 for a significant amount of M&A activity or “distress opportunities” to unfold, Genoot explained.
The Bitcoin halving is currently slated for April 20 when block 840,000 is reached. The event will reduce miner rewards from 6.25 BTC ($412,000) to 3.125 BTC ($211,000) at current prices.
Genoot added that investors will flock toward “large-scale operators who have the lowest marginal cost of production,” in the wake of the halving.
The Hut CEO said he took a similar course of action last December when he founded US Bitcoin Corp (USBTC) and combined it with Hut 8 Mining Corp’s operations in an all-stock merger.
The merger is now registered as Hut 8 Corp in Miami, Florida, which boasts over 9,100 Bitcoin, worth $600 million on its balance sheet.
Related: Riot, TeraWulf and CleanSpark best-positioned miners for Bitcoin halving — CoinShares
Bitcoin is currently priced at $66,000, with the halving event now 17 days away.
Historically, Bitcoin has set new all-time highs approximately 6-12 months after the halving event, occurring three consecutive times in 2012, 2016 and 2020.
Bitcoin bucked this trend in recent weeks, surpassing its previous all-time high price of $68,990 on March 5, roughly 46 days out from the halving.
Several industry pundits look to the recent launch of spot Bitcoin exchange-traded funds in the United States as the main contributor to Bitcoin’s outsized and atypical price action in recent months.
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