Miner Weekly: Q2 Special
Production costs, general and interest expenses all went up in Q2. Signs of debt financing slowing down while equity rising again.
Highlights of the Week
Q2 was a tough quarter for public bitcoin miners: 18 of them sold more than 21K BTC, which was 660% of what they sold in Q1 and ~150% of their productions in Q2.
What's worse than shrinking revenues? The rising cost of production, as well as general and interest expenses. These all make up the total costs for producing one bitcoin.
Q2 numbers from eight public miners who have released full financial statements so far show that their average cost of production, general and interest expenses per each bitcoin mined spiked by 22% in Q2 v.s Q1. They represent ~10% of the network hashrate.
On the lower end was HIVE, Riot and CleanSpark, each at ~$16k per BTC mined in Q2. That included raw production cost (energy/hosting bills, maintenance, technicians), general expenses (exec payroll, professional fees, insurance, etc) and interest expenses on outstanding loans.
On the higher end was Stronghold Digital at ~$45k given its large general and interest expenses — hence the debt restructure story below.
Q2 cash flow statements also show signs of debt financing slowing down, at least for the eight public miners, while equity rose again. Q2's offerings were nearly 4X of Q1 raises. Outstanding loans (current+long-term) remained steady at ~$1.2 billion as of June 30. This has not yet included Core Scientific, which is yet to release the latest 10-Q.
On the bright side, almost everyone managed to outgrow network's hashrate rise in Q2. But QoQ production growth lagged a lot behind the operating hashrate growth. Why? Not everyone was able to maintain a good uptime. If the result of operating hashrate growth minus production growth is around or smaller than the network average of 9.8%, it's a sign that a mining operation not only was growing but also maintained a higher uptime.
Regulation
SBI Holdings to Shut Crypto Mining in Russia — www.bloomberg.com
The move adds to the churn in the region sparked by the threat of US sanctions.
Celsius Gets Cash-Injection Offers, Approval to Sell Mined Bitcoin — www.coindesk.com The company had said Monday it might run out of cash by October.
House Lawmakers Send Letters to 4 US Crypto Miners Asking for Details on Environmental Impact — www.coindesk.com
The four were Core Scientific, Riot Blockchain, Marathon Digital and Stronghold Digital
Hardware
Stronghold Gives Back 26,200 Rigs to Reduce Debt — www.bloomberg.com
Stronghold set to reduce half of its debt with NYDIG and WhiteHawk Capital to add liquidity.
Finance
Prime Blockchain, 10X Spac End $1.25 Billion Merger Deal — www.reuters.com
The crypto mining firm and its blank-check vehicle mutually ended the merger deal.
Riot Takes $349M Goodwill Impairment Charge on Acquisitions — www.coindesk.com The company also posted an impairment charge of $99.8 million on its bitcoin holdings.
Infrastructure
Construction of Bitcoin Mining Facility Suspended Near Nuclear Plant — www.standardspeaker.com
The nuclear plant owner in Pennsylvania confirmed the news in a statement this week.
General & Features
Texas Businesses Have an Incentive to Save Power—and Aid the State's Electricity Grid — www.bloomberg.com