Canadian cryptocurrency mining business Bitfarms sold more than $62 million in bitcoin in June, using the proceeds to settle its debt. According to a statement released on Tuesday, about 47% of Bitfarm’s total holding of about 3,000 bitcoins, or about 6,349 BTC, has been sold in the past seven days.
According to the company, it will “rebalance its liabilities by reducing its BTC-backed credit facility with Galaxy Digital” with $62 million from BTC sales. At the time of writing, Bitfarms had $38 million in debt after using the cryptocurrency it sold in June to reduce its credit facility from $100 million to $66 million.
It appears that 1,500 of these BTC were involved in the cryptocurrencies sold.
Volatile market conditions worsening the situation
The decision by Bitfarms coincides with the severe price volatility seen by popular cryptocurrencies such as Bitcoin and Ether. The price of bitcoin fell below $20,000 for the first time since December 2020, although it has risen to over $21,000 at the time of writing.
Figures provided by the company show that BitFarm can generate an average of 14 BTC per day, or about 1,260 BTC per quarter. Given that the corporation bought 1,000 BTC in early January for $43.2 million, they may therefore risk selling at a loss. At its current price, the same amount of bitcoin could be bought for less than half the price.
However, according to Bitfarms CFO Jeff Lucas, the company had to liquidate its shares of Galaxy Digital LLC to reduce its debt from $66 million to $38 million. he said,
“Given the extremely volatile markets, we have continued to take steps to improve liquidity and to reduce and strengthen our balance sheet. Specifically, we have sold 1,500 more bitcoins and are no longer hiding our entire daily BTC production.”
At a price of over $41,000, Bitfarms reportedly held 4,300 BTC, or about $177 million, in January. At the time, founder and CEO Emiliano Grodzki claimed that the goal was “to accumulate the most bitcoins in the least expensive and shortest amount of time.”
So, what’s important right now?
Despite bitcoin’s long-term price stay consistent, Lucas argued that the company should focus on its core priorities. These include maintaining its position as a top-tier mining operator and pursuing further business growth.
In Quebec, Washington and Paraguay, Bitfarms operates 7 industrial-scale facilities which are operated by 99% Hydroelectricity and protected by long-term energy contracts.
Due to its daily creation of new bitcoins, Bitfarm will independently become one of the highest-grossing mining firms. Despite the financial issues it is facing now, most similar to cryptocurrency companies, which have had to reduce their staff and expenses.
The Toronto-based company is the most recent publicly traded mining company to have sold its bitcoin assets to remain in business. Additional miners may feel pressure on their holding strategy as a result of the current market downturn. Especially when it becomes difficult for the sector to raise money from the stock market and settle debt.