Slumping Bitcoin prices, paired with record-high hash rates and increasing energy prices, have caught up with Bitcoin miner Iris Energy.
The Australia-based mining firm is set to take a significant chunk of its mining rigs offline following a loan default of $107.8 million. The Bitcoin mined from the rigs in question was used to service the said debt.
Inefficient mining rigs taken down
According to the firm’s filing with the United States Securities and Exchange Commission, these rigs could not provide sufficient cash flow to cover the debt obligation. A gross profit of $2 million was being generated against the $7 million that was needed to cover the debt.
Iris Energy told the SEC that as of 20 November, its mining capacity was 2.4 EH/s (exahashes per second), down almost 3.6 EH/s since 4 November. The current mining capacity comprises approximately 1.1 EH/s miners in operation and approximately 1.3 EH/s miners in transit and/or pending deployment.
The mining firm has indicated that it will not be able to repay its debt with its current financial position. To that end, the inefficient rigs will be taken down.
Iris Energy makes second loan default in a month
This is not the first time that Iris Energy has defaulted on its loans this November. The mining firm was first served with a default notice for a $103 million loan from Bitmain Technologies. According to a previous filing with the SEC , the creditor alleged that Iris Energy failed to cooperate with restructuring efforts. This loan was taken out in order to purchase mining equipment.
Iris Energy’s share price has gone down almost 18% in the last 24 hours. This worrisome figure is only dwarfed by the stock’s performance over the past five days – Down by 43.22%.
Trouble all around for crypto-miners
Crypto-miners around the world have been caught in the crosshairs of the bear market and a string of bankruptcies in the crypto-market that have severely affected prices.
Colorado-based Bitcoin mining company Riot Blockchain Inc. revealed disappointing numbers during its Q3 earnings call. The firm’s revenue tanked by over 17%. London-based Argo Blockchain is also caught in a liquidity crunch, despite a recent capital injection of $28 million.
Popular names like Compute North and Core Scientific also have been unable to avoid the aftershocks of the bear market. Compute North filed for chapter 11 bankruptcy towards the end of September with almost $500 million in liabilities. Additionally, Core Scientific’s filing with the SEC last month revealed that the Texas-based mining company may run out of cash before the end of 2022.
Marathon Digital faces trouble on these fronts; is Compute North to blame
- Compute North’s bankruptcy left Marathon Digital with a $20 million worth loss
- Marathon Digital mined 472 BTC in November 2022
Bitcoin mining giant Marathon Digital released its Bitcoin Productions and Mining Updates recently. The updates included details about its revenue, mining information, and holdings. Additionally, there was an update regarding Marathon Digital’s deposits with Compute North.
Only $22 million worth of deposits are recoverable
A fellow miner, Compute North filed for chapter 11 bankruptcy in early 2022 with roughly $500 million owed to creditors. The filing by Compute North left a great liability on Marathon Digital in terms of the latter’s $50 million with the former. As of 30 November, 2022, Marathon Digital had written off $8 million of these deposits.
The company’s shareholders were informed that out of the remaining $42 million, approximately $22 million were likely to be recovered in full. As for the rest of the $20 million, the fate of that sum stood contingent on Compute North’s bankruptcy proceedings. This estimation leaves a $20 million hole in Marathon Digital’s balance sheet.
“The company is continuing to work with various parties involved to determine their ultimate recoverability.” the report read.
The company’s Bitcoin Productions and Mining Updates for the month of September 2022 revealed other investments made in Compute North. Apart from the $50 million in operating deposits, the financial exposure to the bankrupt mining firm included $10 million in convertible preferred stock. It further included an additional $21.3 million related to an unsecured senior promissory note with Compute North LLC.
It is interesting to note that when Compute North filed for bankruptcy in September, Marathon Digital had assured its investors that the filing wouldn’t impact its mining operations. Compute North was Marathon’s largest data center host providing 330 MW.
Marathon Digital’s performance
The report published by the company provided other details as well. Marathon Digital mined 472 BTC in November 2022. The company’s unrestricted cash increased to $61.7 million, whereas Unrestricted Bitcoin Holdings soared to 4,200 BTC.
The company’s share price took a significant hit this year. Over the past month, it lost more than 44% of its value. A look at the stock’s performance YTD revealed an 82.4% decline.
Miners finally see some relief as difficulty decreases 7.32%, making it the largest difficulty reduction in 2022
Miners finally see some relief as difficulty decreases 7.32%, making it the largest difficulty reduction in 2022 Andjela Radmilac · 13 hours ago · 2 min read
Bracing themselves for one of the harshest winters yet, miners are about to get at least some relief as they see the largest mining difficulty adjustment since July 2021.
2 min read
Updated: December 6, 2022 at 8:42 am
Cover art/illustration via CryptoSlate
The crypto industry has always been highly volatile, but few could have predicted the turmoil it experienced in 2022. This year has been unprecedented for the industry, with every aspect affected by the collapse of Luna and FTX.
Aside from retail investors who took considerable losses in these black swan events, Bitcoin miners remain the ones this crisis affected the most.
But it’s not just Bitcoin’s price that’s keeping miners underwater.
Last year, dozens of mining companies went public and acquired cheap debt in the process. The debt, originally intended to expand their operations, has now become a burden. Rapidly declining crypto prices make it nearly impossible for many to service their loans while they struggle with rising energy prices and skyrocketing equipment costs.
This has forced many miners to reduce or completely shut down their operations. As a result, the 7-day average hash rate has decreased by 8.4% in the past month, and 4.6% since the current difficulty epoch began.
Bitcoin’s hash rate peaked in mid-November after entering a parabolic climb in August. However, its fast rise was followed by the most significant single-day decline since July 2021, dropping 13%.
So far, the market has seen two major miner capitulation events this year — one caused by the collapse of Luna and the other caused by the FTX fallout. Many public Bitcoin miners have emptied their Bitcoin balance sheets to stay afloat, negatively affecting their stock prices.
Since the beginning of the year, all of the nine largest public Bitcoin miners have seen their stock price plummet, with some losing as much as 98.66% of their value.
However, the struggling industry could see some relief in the coming days.
Bitcoin’s mining difficulty has dropped over 7% in the early hours of Dec. 6. While the drop might seem insignificant on a large scale, it’s the most significant adjustment the industry had seen since July 2021, when China instated its controversial Bitcoin mining ban.
The 7.32% decrease in difficulty will give miners relief as the year ends, providing at least some support to their thin profit margins. However, we are yet to see how the global hash rate reacts to the decrease in mining difficulty, as it could take another week before a notable change is seen.
Nonetheless, Bitcoin’s mining difficulty remains twice as high as in June 2021. Moreover, the global mining difficulty has continued to increase throughout the year and is now three times as high as in June 2021.
Bitcoin’s Difficulty Slides 7.32%, Reduction Marks The Largest Drop In 2022
On Dec. 5, 2022, at block height 766,080, Bitcoin’s mining difficulty adjustment dropped 7.32% lower, making it the largest difficulty reduction in 2022. The current difficulty is approximately 34.24 trillion and it will remain at this point for the next two weeks or 2,016 blocks.
Bitcoin Miners Catch a Break as the Network’s Difficulty Drops 7.32% Lower
Bitcoin’s difficulty retarget has dropped, which makes it a bit easier for bitcoin miners to find a block than it was during the two weeks prior. The difficulty change occurred around 8:50:29 p.m. (ET), at block height 766,080 and it was the largest reduction this year. The difficulty reduction was larger than the prior record that was recorded at block height 745,920. At that time on July 21, 2022, the network’s difficulty dropped by 5.01% and the difficulty was around 27.69 trillion.
Prior to the 7.32% reduction down to 34.24 trillion, the network’s difficulty rating was at a lifetime high of 36.95 trillion. Satoshi created the difficulty retarget to change periodically or every 2,016 blocks so the average time to mine a block remains constant at around 10 minutes. Statistics show prior to block height 766,080, the average block time was around 10:48 minutes, which meant a notable difficulty reduction was predicted to happen prior to the change.
At the time of writing, at 9:00 p.m. (ET), the total hashrate associated with the Bitcoin network is around 271.33 exahash per second (EH/s). Foundry USA is the top bitcoin mining pool at the time of writing with 25.48% of the network or 64.47 EH/s. Foundry discovered 107 blocks out of 420 discovered in the last three days. Foundry is followed by the mining pools Antpool, F2pool, Binance Pool, and Viabtc respectively.
Tags in this story
2016 Blocks, 7.32% lower, 7.32% reduction, All time high, Antpool, ATH, Binance Pool, Bitcoin mining, BTC Mining, Changes, difficulty, difficulty change, Difficulty Changes, difficulty epochs, Exahash, F2Pool, Foundry USA, Hashpower, Hashrate, Hashrates, Increases, mining, Mining BTC, Mining Pools, Terahash, ViaBTC
What do you think about the difficulty dropping 7.32% lower? Let us know what you think about this subject in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
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