After the total crypto market value reached a high of $999 billion on the weekend, the crypto market has started the week in the red, as Bitcoin has dropped below $20,500. There is increased fear around the Bitcoin mining sector, as some miners are simultaneously going bust.
Bitcoin (CRYPTO: BTC) miner, Argo Blockchain, today revealed a deal to raise £24 million from a strategic investor fall through. This has resulted in Argo Blockchain shares (ARB) to fall as much as 72%.
Argo said in a statement to the London Stock Exchange, "Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations.” As Argo has failed to raise further capital, there is an increased likelihood the Bitcoin miner will cease operations in the near future.
Last week, the largest Bitcoin miner by computing power, Core Scientific, warned investors that it may have to explore bankruptcy if it fails to improve its financial condition. This caused Core Scientific shares to plummet over 80% in 5 days. Another Bitcoin mining company, Compute North, filed for bankruptcy in September, owe as much as $500 million to at least 200 creditors.
Deteriorating mining economics, rising energy costs and high leverage are factors that have all led to many miners collapsing. However, could this lead to a surge in Bitcoin mining using renewable energy?
Bitcoin proponents would argue there is an economic incentive for Bitcoin miners to use renewable energy, due to their cheap cost in relation to current energy used for Bitcoin mining. In fact, according to the International Renewable Energy Agency, renewables constitute the cheapest forms of energy in most major countries. In addition, there are expectations for their costs to continue falling in the coming years. Hence, the future may be bright for the crypto mining industry, despite the hard times they are currently facing.
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