Member Info for HarChris

Would this have already been sold by the authorities as it was seized last year?

Blubay none of the 'at risk' miners have enough bitcoin HODL to affect the bitcoin price. There's Corz with just 68 bitcoin left, Argo had 512 at last count but likely under 200 now, iris have no HODL at all, Greenridge don't holder either I believe, Bitfarms have 2064 so they might add a little extra selling pressure in the months ahead but still pretty limited.

Interesting to see the Corz update today - they've grown their self-mining hash even further to 14.4 Eh/s and yesterday alone they mined 43 BTC! Going to be a lot of hash to be shared around soon.

Whilst we've seen numerous companies recently flag up issues it is only Corz that's likely to fold in the next quarter, the rest (Argo, Iris, Greenidge, bitfarms soon I think) should be able to limp on and the rest of the miners will continue to expand, raising where necessary to buy cheap rigs. So I think hash rate will at least stay flat but probably continue to increase in the coming months which puts even greater pressure on the industry and sector.

So yeah only Corz likely to fold in the next three months but it's tough to imagine some of the others I just listed ever making enough / raising enough to meet their debt obligations in the years to come (barring a significant and sustained move in bitcoin).

As I pointed out yesterday PW won't need to secure funding asap after selling even more machines. Even the slightly higher BTC price will take the pressure off a little.

At this stage it's probably worth gambling on a bitcoin rally in the hope of raising at a higher share price rather than dilute the hell out of the company at 7p.

I'd imagine many like me will be waiting for the October operational update first, due any day. Most likely they'll be no news on funding and it'll cause an initial sell off.

That's a bold prediction there, let's see who's right! Whilst I think there's a decent chance of a relief rally soon i'm certainly not expecting any meaningful sustained move until at least the spring of 2023. For now my open long on CLSK is merely a trade based on that expectation and would be closed if BTC were to hit ~$25k.

Yeah certainly feeling the same as PI with this one. Everything aligned in June to cause that collapse in BTC to $17600, we had the Celsius saga, we had miners capitulating (Corz sold 7200 in June, Bitfarms dumped 3000 BTC the same week as the low), panic ensued about a potential MicroStrategy margin call below $21000.

Since that low the macro picture has worsened and worsened, interest rates are going through the roof and we are all but guaranteed a global recession, the nasdaq is down about 7% and yet BTC is up 20%.

The threats that came together to cause that massive sell off in June are now alleviated. There are currently no distressed miners with large bitcoin holdings, the network has considerably deleveraged since and the FUD around MicroStrategy proved to be false (those potential margin calls come in 2025).

Obviously predicting short term movements in bitcoin is difficult but for the reasons stated I think we'll see $30k before we see any new low.

Well for starters if BTC drops to $10k for five years it's finished, in an inflationary world it would be totally dismissed as a store of value and it would then slowly bleed to zero.

As a thought experiment your scenario is an interesting one. Ironically in that extreme example some miners would be profitable as strange as that sounds because all the old machines would be replaced with new ones at absolutely knock down prices - however the profits would never be enough to meet the large debt repayments that would hit all the miners by 2025.

In other words debt payments are based on 2021 bull market prices and that would eventually catch up with every public miner.

I imagine over the cycles they'll be three or four miners consistently in a position to raise enormous amounts in the bull markets and then swallow up all the others on the cheap when things turn for the worse... and we'll see something like Riot, Marathon and a few others with 40% of the network between them.

It's because the sector pumped so hard in 2021 that we are where we are now. All these miners were able to raise many times more than they realistically should have been able to under normal market conditions sans such hype.

There's a limit to how long this can go on for though of course. Let's say, to make the point clearer, BTC stays at $20k for three years and most miners simply survive by selling all their bitcoin and raising here and there to make up the shortfall... At the end of the three years those miners simply surviving will have zero assets left as their old machines have become defunct and not been replaced.

How long can they continue to lose money on every Bitcoin mined you ask? An awful long time... Why? Because many of them have raised hundreds of millions of dollars. Corz are only going under because they took on so much debt, due 2022/2023 and then the market turned far more brutally than expected. Already the price of machines has reduced to such a degree that most miners could make profit on any new machines they buy and plug in now.

I don't foresee any real risk to the majority of miners until their debt obligations kick in which is 2025 for most of them.

If you think that all the miners could go bankrupt then you don't understand how the difficulty mechanism works. Theoretically at least what we should see is the weakest miners going under and the strongest miners picking up those assets on the cheap with the cycle continuing until enough miners have gone under and the network has been consolidated in just a few hands.

I don't think we're close to that though, only Corz will fold within the next six months and then argo and possible a couple of others if the picture doesn't improve in the next twelve months.

Having said that I think as an investment Argo is finished. Besides a miracle it's rather hard to see how in such a competitive sector they are going to end up one of the winners come the next cycle and the losers will go out of business.

In the rns from early October Argo announced that the strategic actions proposed were to 'ensure that the Company has the working capital necessary to execute its current strategy and meet its obligations over the next twelve months.' That composed of $5.7m from amending NYDIG financing deal, $6.8m from selling machines and $27m from the strategic investor so call it $39.5m.

What they have currently is the $5.7m + $6.8m + $5.6m = $18.1m. Now that $39.5m probably included some cash in the event that BTC headed to $15k or for some expansion plans so let's say Argo needs $35m to make it through the next twelve months. What they have is half of that... so without digging too deep into the detail of when certain debt obligations are due we can probably assume the recent financing measures gives Argo about six months of runway to survive.

Now with the LOI on the table at 27p the share price ranged between 11p and 21p, with the funding fallen through and the risk therefore significantly heightened it looks like it'll range between 6p and 11p. If bitcoin pushes on again next week I imagine it'll attempt to go a little higher than that.

Is there a trade to be had here? For me there is at the right price as I think the risk in the very near term of another share price collapse (like we saw on 7th Oct and 31st Oct) is low now.

It's hard to argue with that strategy, investing in the miners that are guaranteed to still be here in 2024 irrespective of bitcoin's price from now til then. I think that can more or less be said for 5 or 6 miners but only those with HODL - Mara, Riot and Hut8 - are guaranteed to reach that stage without additional funding. On the flip side I'd be avoiding like the plague any miner that with high interest debt that needs repaying in the next twelve months, like this red flag:

TeraWulf, another bitcoin miner down 92.38% year-to-date, runs a relatively high debt-to-equity ratio compared to other miners (86%) and has $120 million in debt to start being paid back in spring 2023 at an 11.5% interest rate.

It's a good article, thanks.

Jaran prices current market rate at $23 per TH and therefore no more than $15 per TH but realistically second hand ASICs are going to be worth $10 per TH at an absolute max.

So Corz has $17m monthly repayments to make yet just $7m cash flow at $20500. I therefore estimate that they need bitcoin at $28500 to be able to just about stay afloat and make those monthly payments as things stand. In other words, like with Argo, if bitcoin rallied hard next week they'd be just a tiny ray of hope for them but realistically that's rather unlikely to happen.

Miners won't create much downward pressure on bitcoin now as seen from the events of the past few weeks. Those in distress, namely Corz and Argo, have already dumped earlier in the year and so the damage from them is limited. Others like CleanSpark, like Bitfarms, like Riot have either sold most of their holdings already to fund growth or are selling piecemeal each month so again no risk of contagion from them. Bad news came from Iris Energy this week but they sell all that they mine so same story.

Really it's just Hut8 and Mara that could cause pain if they ran into trouble but there is no threat of that happening.

Whilst my interest is growing I know my knowledge is far less than that of yours and others on here like Hexam and AB so I'm glad we're having this debate as I find the interaction a valuable way to research and learn more about these companies and the sector.

What I'd like to see as a clsk holder is BTC remain steady whilst the machines continue to tumble in price / even cheaper used rigs hit the market. Look at the difference a handful of weeks makes...

7th September - 10000 Bitmain S19J Pro's bought for $28k a pop
1st November - 3843 Bitmain S19J Pro's bought for $15.50 a pop

Almost halved and at decreased scale... imagine what firesale administration prices will look like!

When the bull run hits traders may start differentiating based on operational size, cash flow vs market cap. In the midst of a bull run HODL might not be as valued a metric, maybe clsk's relatively similar revenue will look appealing for a company a tenth of the market cap?

Your comparison's don't factor in the difference in market cap - there is no doubt that Mara is head and shoulders the stronger company, it's a fact, they struck the best deals at the most opportune time whilst bitcoin was booming.

Is it priced in at 9 times the valuation of clsk? Well that's what's up for debate.

Chae you used the dilution as a standalone metric to make clsk look dodgy, I simply highlighted that it's part and parcel of the industry.

It really depends on how you look at it. Compared to the peak clsk is now selling bitcoin at a 68% discount whilst buying machines at a 80% discount (85% discount most recent purchase). I think the target is pie in the sky, it's based on the assumption that they're going to either (i) get hold of a hell of a lot of distressed assets at firesale prices (perhaps a decent share in Corz' 13EH for example) or (ii) bitcoin rallying and being able to raise tons of cash at ~$12 a share in 2023

If you remember I've had the same conviction for over a year now. I am not confident that the bitcoin experiment ends in success, I think by 2028 there's a fairly decent chance bitcoin will be <$5k but what I am sure of is another sensationalised bull run before 2024 is out. Clsk is just a trade for me and as long as any debt they take on is due after 2024 I will breathe easy.