Faced with the cryptocurrency crisis, major mining companies are stepping up their maneuvers to cut expenses. With energy consumption being huge, some are choosing to partially shut down their mining machines. Miner Corz Scientific has distinguished itself in this sense in its data center in Texas with the shutdown of its machines. As a result, its bitcoin production dropped in July, forcing it to dip into its reserves to sell massively. In the end, its realized bitcoin sales were still greater than its production.
What explains the drop in bitcoin mining?
If we take the July mining operations of Corz Scientific, it was only 1221 bitcoins (BTC) that the company was able to obtain. Because, the mining had to be stopped repeatedly at the request of the authorities who control the electrical grid in Texas, where the mining takes place. Core Scientific’s computing power is one of the largest in the world. It’s no surprise that this Texas infrastructure has put a strain on the power grid.
The 180,000-server miner only produced 1,221 bitcoins, but sold 1,759 of them to increase capital and growth expenses. In all, Core Scientific took in $44 million, or $22,000 for each bitcoin sold. Specifically, some of this money was used to significantly expand its database capabilities. Core Scientific used some of the money to pay Bitmain. Core Scientific had ordered 100,000 mining platforms from this supplier last year.
Decline in mining: Should we fear mass sales?
The bear market isn’t making it any easier to mine the king of cryptocurrencies. To stay alive, some companies are still selling off their bitcoin reserves in droves. But, the question we’re asking is whether this is inconsequential? It must be said that the bear market that is the cryptocurrency market right now is encouraging this kind of maneuver. Miners are selling their mined digital assets en masse this year to pay for expenses. Riot Blockchain (RIOT), for example, reported selling 275 bitcoins in July for $5.6 million.
It will be recalled that Core Scientific sold 7,202 bitcoins in June, raising about $167 million. The miner said it has less than $10 million in remaining payments for the rigs, excluding shipping and customs fees. However, he still holds 1,205 bitcoins and has about $83 million in cash on his balance sheet
This miner is a major player in the industry. Founded in 2017, Core Scientific has quickly become one of the largest Bitcoin miners in the world. As of June 30, it already had 180,000 servers, or 10% of the world’s mining capacity. The company has just informed that this provision has risen to 195,000 mining servers. All this device produces a hashrate of about 19.3 exahash per second. According to Core Scientific, this is the highest mining power in North America. Following this announcement, its shares have seen a 4% increase, which now puts the miner above some of its direct competitors
In sum, miners are resorting to massive bitcoin sales to cope with bear markets. Core Scientific for example has no intention of stopping there. The miner has announced plans to sell self-mined bitcoins to pay for operating expenses, fund growth, pay down debt and maintain a decent liquidity rate. It is clear that if the bear market persists and production continues to fall, miners will not be able to make do with self-mined bitcoins alone, they will have to find other solutions.
