Publicly traded bitcoin miner Core Scientific confirmed on Tuesday that it sold $167 million worth of bitcoin in June alone. This sell-off left miners with only 1,959 bitcoins on their balance sheet and $132 million in cash.
A Closer Look at the Minor Selloff
As revealed in the company’s monthly operating update, Core Scientific operates more than 180,000 ASIC servers in Georgia, Kentucky, North Carolina and North Dakota. These servers cumulatively produce 17.9 exhash per second (EH/s) – the same amount used to mine bitcoin blocks. For context, the average daily hash rate of bitcoin is around 197 EH/s at the time of writing.
However, a lot of energy is expended in the production of these hashes, which effectively represents a clear cost for mining bitcoin. Thus, a miner’s net profitability can be severely affected by its ability to source cheap electricity, the efficiency of its ASICs (miners), and the price of bitcoin.
The latter variable has been the miners’ biggest enemy over the past two months. As the price of bitcoin fell after the collapse of Terra and its contagion, miners have made little profit. In fact, data from Arcane Research shows miners sold more than 100% of their bitcoin profits in May, with deep losses expected for June.
If Core Scientific is any indication then this hope is turning out to be true. In June, the mining firm sold 7,202 bitcoins for an average of $23,000, while mining only 1,106 bitcoins in return. This is 651% sell.
Proceeds from those bitcoin sales were mainly used on ASIC servers, data center capacity, and “scheduled repayment of loans.”
In a statement, Core Scientific CEO Mike Levitt acknowledged that the mining industry is going through “enormous stress” amid weak markets and unprecedented interest and inflation rates.
“Our company has successfully weathered downturns in the past, and we are confident in our ability to navigate the current market turmoil,” he said.
How are the other miners doing?
The market has also put mining companies such as Compass Mining and Bitfarm in financial trouble. Compass stepped down from both its CEO and CFO last week amid “numerous setbacks and disappointments” combined with its $500,000 power loan. Meanwhile, Bitfarms sold 3000 bitcoins in June, representing more than 50% of its stake.
Marathon Digital was even less fortunate. A recent hurricane in Montana left 75% of its mining fleet powerless, according to an announcement last Tuesday.
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