I think we're broadly in agreement. You then went on to say this:
'Of course even if ARB fall into a position where it looks like they won't have the funds to repay debts or post the necessary collateral they will have various options to try to deal with this (re-financing, equity raise etc.).'
I suppose I should have said very, very slim chance of bankruptcy rather than literally no threat but other than that we agree - bankruptcy is not the concern right now, it's surviving the bear market in one piece so as to see a share price recovery on the flip side .
Talk of Argo going under is scaremongering Chae, whilst times are obviously bleak for all miners there is literally no threat of bankruptcy for Argo for the considerable future. BTC would need to stay below $19k (and probably go even lower) for a substantially long period for there to be any threat to argo's existence.
What's actually important is if, in the likely event BTC recovers and another bull run ensues, Argo will be in a position to take advantage of it.. Will there be HODL to sell at $50k, at $60k, at $100k etc ? Will there be a bigger debt pile to service at high interest rates taking on during the bear market? Will the market get carried away with itself like in early 2021 or has the business model been found out?
The next three to six months will determine whether Argo ends up 50p a share on the flip side or £3+
I think it's worth noting that there isn't likely to be many new entrants in the short to medium term. Even with rigs dropping in price it will be near to impossible to raise equity at this point in time and any entity that is cash rich is more likely to just start buying BTC direct than go out and built themselves a large mining operation.
If any big miners go to the wall then yes that's different, the steeply discounted machines would then make it worthwhile or we could even see miners bought up on the cheap.
Yeah my point is they aren't losing more because they are mining more (i.e better to switch off machines), it's simply that they've got too big too quickly and have been caught out by the lower than expected bitcoin price (~$25k-$30k trading range would have been far more manageable). In other words the spotty kid mining 0.01BTC in his bedroom is losing the least of all.
But as long as most of the liabilities are long term, 2024 onwards, then there is still plenty of time for bitcoin to pick up before those companies get into serious trouble.
How is that the case Chaebol? I get that none are making a profit at this level but if the machines have been paid for, the land has been paid for and all the work to get the operation to full whack why would mining more cost more? I'm confident Corz' costs discounting all the sunk costs wouldn't be more than $20k a bitcoin / $24m a month.
The issue is all the debt accumulated to get those mega-sized operations and in particular short term repayments that have to be met.
Well of course it's good from 40-70p but that isn't the point. Today the news was considerably better than expected and yet a few weeks ago I might have been paying 125p+ for avacta shares - today I got them for 108p. People hold in order to be in it when the good news lands effectively pricing out those like me, it hasn't done that this time...
I've been on the sidelines again recently and thought I'd obviously missed my opportunity to get in only to find myself with a 108p buy quote on open - feel this 10% is little reward for those that held on and took on the risk.
BC well the share of the total network increases for the other miners and their bitcoin mined goes up slightly but no Mara going offline won't be significant by itself, we're talking perhaps 1-2 extra BTC minted for Argo if all their operations were to go offline.
RE: Bitcoin Miners Fight for Survival as Crypto Winter Deepens28 Jun 2022 15:57
Fair enough Hexam, I think difficulty will continue to fall but you're right it won't come down quickly and will take some time for the least bear-fit miners to bite the dust. Even then I suppose we'll see distressed assets bought off cheap as well as new cash-rich entrants coming in and buying up ASICs on the cheap so hash rate is unlikely to ever capitulate.
RE: Bitcoin Miners Fight for Survival as Crypto Winter Deepens28 Jun 2022 15:18
Once machines start being turned off those keeping theirs on will see the benefit. For example let's say company A's all in sustaining costs (AISC) are $5m a month and they are currently mining 200 coins a month, their breakeven BTC price is therefore $25k. Fast forward a few months and company A has managed to continue with operations whilst peers are switching off machines and others have actually gone under... now difficulty has halved so $5m a month costs mining 400 coins a month gives a BTC breakeven price of just $12.5k.
If miners are truly feeling the pinch already then this sort of scenario is going to play out sooner rather than later.