Bitcoin Mining: Operation and Financial Updates from Stronghold, Hut8, HIVE, Riot and More

Only five weeks into the last quarter of 2022, the cryptocurrency market has already served a cocktail of volatile and hostile flavors much more than it did in Q2. Even still, the last quarter was not significantly optimistic, and the financials of various miners reflect this performance. The majority of publicly traded Bitcoin miners have, as of Nov 11, provided updates on their operations through the recently-concluded quarter and across October. Here is a recap:

Healthy miners focus on improving liquidity and delevering their balance sheets

Hut 8

Canadian Bitcoin miner Hut 8 revealed in its quarterly report on Nov 10 that it increased its mining capacity by 10% and simultaneously slashed its average cost to mine (per BTC) by 29% in comparisons to Q2. Revenue across the Q3 declined to $31.7 million compared to $50.3 million in the same period last year. The firm’s expanded fleet of miners brought its operating capacity to 3.07 EH/s by the end of the quarter helped it earn 982 Bitcoins.

Iris Energy

Australian Bitcoin mining firm Iris Energy filed its Form 6-K for November with the SEC on Monday, revealing that it had defaulted on a financial agreement with its lender, New York Digital Investment Group (NYDIG). The Bitcoin miner received the notice of default on Nov 4 after failing to come to a compromise based on “good faith restructuring discussions” of the debt. Iris disagreed with the allegations, compelling the institutional digital assets broker to activate an acceleration clause.

The clause requests prompt payment of the whole principal amount as well as any accumulated interest, according to the report. The financials in question amount to $103 million and are held by two special-purpose vehicles split into $32M (secured by 1.6 EH/s) and $71M (secured by 2.0 EH/s). This means just 2.4 EH/s of the firm's mining rigs remain autonomous of equipment loans, as Iris disclosed a third $1 million loan secured by 0.2 EH/s.

Hive Blockchain

Consistent Bitcoin production is keeping Hive Blockchain warm during this crypto winter. Hive's lack of debt servicing payments, full ownership of all its ASICs and GPUs, and absence of over-the-board loans against this equipment have allowed it to continue growing the Bitcoin stash. The Canadian firm reported it earned 307 tokens in October, totaling 3,311 Bitcoin. October's production averaged 9.9 Bitcoin per day and 115 BTC per Exahash.  Hive expects to add another about 1 Exahash over the next three or four months as the new Intel ASIC chips ship in.

Stronghold Digital

In the quarter ending Sept 30, Stronghold Digital closed its previous agreement with WhiteHawk Finance and also eliminated $67.4 million in principal value of debt owed to financial services firm NYDIG.According to the release details shared on Nov 9, the mining firm accrued 567 Bitcoins during this period – a notable decline from 637 coins during Q2.

The miner's net debt decreased by 51% to $55 million, while its principal amount of debt outstanding totaled $82 million. The Wednesday figures represented Stronghold's first results since announcing debt restructuring accords with various entities. The vertically integrated Bitcoin miner disclosed on Nov 1 that it had completed the restructuring of its WhiteHawk loan. It also consensually canceled the remaining debt with NYDIG after returning its final batch of Bitcoin miners on Oct 26. Also last month, Stronghold mutually settled a hosting dispute with Northern Data in an agreement that the company projects will boost cash flow by a net $10 to $22 million in the next 24 months.

Riot Blockchain

Meanwhile, revenue generation fell short of analysts' expectations of Riot Blockchain's performance in Q3, according to the financial results posted on its website. Its revenue slashed to $46.3 million, $10 million less than expectations. The reporting translates to a now bigger net loss of $0.24 per share, compared to $0.16 over the same period in 2021.

Though it ended up with lower than Q2's $72.9 million in revenue, the Bitcoin miner's cash reserves were not affected much. The firm had 6,653 BTC and $270.5 million in cash by the end of Q3, compared to Q2's performance – of 6,766 BTC   and $255 million in cash. CEO Jason Les cited the miner's strong liquidity position as an enabling factor to pursue its growth agenda, seeking even higher hash rates despite the current market conditions.

Marathon Digital

Nevada-based Marathon Digital also failed to meet its estimates, logging a loss threefold that of analyst approximations. According to the earnings report published on Nov 8, the company recorded a loss of $75 million in Q3, averaging $0.65 in loss per share. In comparison, it generated $12.7 million in revenue. It added 616 Bitcoin which means that despite YoY and QoQ changes being down, Marathon became the second largest publicly-traded Bitcoin holder.

Compass Mining and Core Scientific

Compass Mining reached a hosting agreement with Aspen Creek Digital Corporation, ACDC, last month. The Delaware-headquartered firm, having seen one of its hosts shut down operations (in Georgia) due to extravagant power costs, secured the deal to get 27 megawatts of ACDC's 30 MW solar-powered facility in Texas. Compass intends to deploy 9,000 miners at the facility. Also feeling the brunt of the market is Core Scientific.

The Texas-based miner recently communicated that it is considering bankruptcy after its financial health worsened. As per an Oct 26 form 8-K filing, Core Scientific told the SEC it could not make debt payments due late October and early November. The mining company cited the growing power costs, low Bitcoin price, legal issues with lender Celsius, and an increase in the global Bitcoin hash rate. Owing to its current issues, Core has retained PJT Partners as financial consultants and Weil, Gotshal & Manges as legal counsel.

MicroStrategy

Though not a Bitcoin miner itself, the largest corporate BTC hodLer MicroStrategy did not meet its revenue expectations in Q3. The company said that because of steady Bitcoin prices in the third quarter of 2022, it only suffered a modest Bitcoin impairment charge of $727,000 in aggregate. This was an easing on the $65 million in impairment losses over the same period last year. As of the end of Q3, MicroStrategy owned 130,000 Bitcoin, purchased at an average of $30,623 per token.

Q4 Expectations

The last couple of weeks have been a mix of dormancy and ebullience in the crypto market, especially the last four days, which have been fraught with uncertainty. Though calm has reigned in the past two days, it is too early to draw a conclusive projection on the quarter.

Bitcoin price course in 2022. Source: Messari

Mining executives, at least some, are not convinced the prices have touched a bottom yet, which could mean more challenging days ahead, more so for ill-prepared ones grappling with bankruptcy risk. Deep-pocketed and those equipped adequately could sustain minor hits if the Bitcoin market fails to stage a convincing climb. Meanwhile, expectations are that those eyeing expansion or acquisition moves will continue with the wait-and-see approach rather than making any major calls at the moment.

Bitcoin Mining Adjustment

Bitcoin private miners have a bit of a reprieve, albeit imperceptible, after mining difficulty on the Bitcoin network saw a slight 0.2% fall.

In the last four weeks ending Nov 6, the difficulty has been remarkably high, hence a welcome turn for the miners, as the metric declined to 36.76 trillion in its latest near bi-weekly adjustment. Changes in the mining difficulty are closely tied to variations in mining hashrate, which currently sits at 213.18 EH/s after a steep decline starting Thursday.

To learn more, visit our Investing in Bitcoin guide.