BTC Miners’ Production Grew Last Month, Mining Difficulty is Still in Range of ATH After Latest Adjustment

Publicly-listed Bitcoin mining firms like Riot Platforms were affected by severe winter storms in December, which effectively halted some of their operations. The recently released January production figures, however, show that these firms have bounced back, at least in terms of performance, due to better weather conditions and stable electricity prices. This favorable background allowed them to remain running for longer hence month-over-month increases. Here are details and other headlines you missed around individual miners.

 Bitcoin production and hashrate growth in January

Bitcoin mining data and analysis platform Hashrate Index observed in a recent report that though the performance of public miners in January varied, most logged higher in hashrates. The author, Jaran Mellerud, noted that Cipher, a Texas-based company, had the most impressive growth, increasing its hashrate by over 50% to 4.3 EH/s, positioning itself as a mega miner.

Monthly bitcoin production. Source: Hashrate Index

Despite the challenges of its bankruptcy proceedings, Core Scientific remains a mammoth miner, reporting 17 EH/s in self-mining hashrate last month, up from 15.7 EH/s. Its hashrate is expected to fall, though, as the miner has committed to using 18% of its rigs to settle a $38.6 million debt obligation with investment management firm NYDIG. Canadian miner Hive Blockchain, on the other, recorded a positive hashrate change of nearly 30% to 2.7 EH/s. CleanSpark added 0.4 EH/s to reach 5.6 EH/s, while Bitfarm’s mining hashrate figure came in at 4.7 EH/s. Nevada-based Marathon Digital had 7.3 EH/s plugged in, compared to 7 EH/s in December.

Though Riot hashrate struck as unimpressive, its Bitcoin production reached a new record high of 740 Bitcoin produced last month. This was the second highest among public Bitcoin miners as Core Scientific sat top, generating 1,527 BTC, up from 1,435 the month before. CleanSpark stood out equally, attaining the greatest increase in production – a 50% swell across the two months to an ATH of 697. CEO Zach Bradford attributed the remarkable figures to exceptional up-time of 98%. Marathon followed closely with its 687 Bitcoin scoop translating to an impressive 45% production growth.

TeraWulf’s Bitcoin productions in January impressed

The operating efficiency of these public miners, as quantified by the number of Bitcoin mined per exahash, shows that zero-carbon-focused mining firm TeraWulf was the most efficient. The infrastructure-focused miner minted 112 Bitcoin per exahash. Among others CleanSpark, Iris Energy, Hive, and Bitfarms produced more than 100 Bitcoin per EH. TeraWulf primarily relies on hydropower for its energy, which has demonstrated greater resilience to fluctuations in electricity prices compared to natural gas (dominantly relied upon by the less efficient miners).

Moreover, three of the top five most efficient miners were heavily reliant on hydropower, a further attestation to its stability as a power source. The Maryland-based mining company shared its January production and operation report last Wednesday, revealing comparatively better figures relative to December. TeraWulf saw its BTC production increase by 25.6% in January to 157 BTC thanks to additional mining equipment obtained from Bitmain, reduced power costs and better weather in January. TeraWulf most recently received 6,100 miners while an additional 15,900 machines are expected to arrive before the next quarter. Remarking on the aggressive expansion since last year, CEO Paul Prager said the company targets a hash rate capacity of 5.5 EH/s by Q2. Earlier this month, the miner said it had restructured its debt obligations to mitigate against negative cash flow, adding to a list of firms that have taken the same route, including Bitfarms and Greenidge Generation.

Core Scientific settled $38.6 million in debt obligations to NYDIG

On the same day, Core Scientific said it had used 18% of its crypto mining rigs to settle a debt with New York Digital Investment Group (NYDIG), as seen in a filing with the US Bankruptcy Court for the Southern District of Texas. The miner told the court that it parted with 27,403 machines to close a $38.6 million loan with the lender. In late 2020, Core obtained a loan of $77.5 million from NYDIG to facilitate mining equipment acquisition. However, by the end of the third quarter, the company had ceased making payments on the loan.

The combination of elevated energy costs and declined Bitcoin prices heavily weighed on the Texas-based miner. The company told the court that the agreement regarding the mining equipment would bring about benefits as the rigs are obsolete with respect to the current business operations and prospective objectives. The miner believes that the agreement with NYDIG will provide significant benefits since the value of these machines used as collateral is less than the outstanding principal, and they are no longer necessary for the company’s operations. The mining rigs have lost about 85% in value over the past year.

NYDIG raised concerns before it finalizes the financing deal

It also recently came out that Core Scientific is evaluating potential opportunities to divest a portion of its mining facilities, which would reduce rack space utilization. The company’s chief mining officer Russell Cann has in the past said that up to 1 GW of the miner’s facilities under development could be made available for sale. The latest update to the bankruptcy proceedings comes after the court allowed the miner to take a $70 million loan from B. Riley to help serve daily business operations for an extended 15 months.

On Feb 1, NYDIG submitted a reservation of rights letter to the court, indicating the possibility of objecting to the financing if Core Scientific does not arrive at a resolution regarding an outstanding debt with the lender. The lender is worried that it lacks adequate protection against the depreciation of the value of the collateralized mining machines under the post-bankruptcy financing arrangements. The company highlighted at the time a much-improved cash flow position since initiating bankruptcy in December. In its January update, Core said it generated 1,527 BTC from its self-mining operations and 471 BTC more from its colocation services.

Court allows Core Scientific to take a $70 million loan to support operations

In a separate development towards the end of January, the bankruptcy court for the Southern District of Texas approved Core to borrow as much as $70 million from investment bank B. Riley Financial, one of the miner’s largest creditors. The firm confirmed in a Feb 1 filing that the creditors’ committee and an ad-hoc committee of shareholders had approved the move.

The crypto miner intends to obtain cash to achieve sufficient liquidity to support business operations and extend its runway by up to 15 months, even as the Chapter 11 proceedings continue. Core Scientific further sought to pay off and replace an initial debtor-in-possession (DIP) loan from the same financier with one molded in better economic terms and more flexibility. It will use $35 million of the new allocation to settle the existing financing loan, and the remaining amount will be available in one or multiple borrowings.

Core Scientific told the court that B Riley offered the best terms after extensive negotiations with multiple prospective lenders. It added that the replacement DIP facility establishes a basis for the debtors to negotiate toward securing a consensual Chapter 11 plan, aiming to maximize value for all interested parties.

Core Scientific has been financially strained after crypto lender Celsius went bankrupt and defaulted on its financial obligations to the miner. A rising cost of electricity and poor Bitcoin prices also contributed to the company’s economic woes. Notably, B Riley had offered Core $72 million in non-cash pay financing in mid-December to help it avoid bankruptcy.

Greenridge restructures NYDIG debt, slashing obligations to $17 million

Bitcoin miner Greenridge Generation revealed in a Dec20 filing with the SEC that it had signed a restructuring agreement for its secured debt agreements with New York Digital Investment Group (NYDIG), targeting to reduce an outstanding loan it owed the investment management firm by between $57 million and $68 million. A recent official communication from the company confirmed that the agreements led to the acquisition of Bitcoin mining hardware by NYDIG and accompanying credits and coupons that Greenridge had gained through previous purchases of rigs from an unspecified manufacturer.

The transfer of miners gave NYDIG a mining capacity of 2.8 EH/s. Greenridge detailed that this change helped it reorganize the original $76 million (including accrued interest) to a reduced amount of approximately $17 million. This figure could decrease to $7 million should it successfully secure the rights, and establish a new mining location in collaboration with NYDIG, within the next three months become a reality. While the agreements mean Greenridge has restricted its business to a predominantly hosting rather than self-mining service, the firm isn’t entirely out of business, as it still has about 10,000 Bitcoin miners, with an estimated capacity of just over 1 EH/s.

Obligations in regards to B. Riley

Notably, Greenridge said B. Riley agreed to change the terms of their previous agreement on the $11 million principal and accumulated interest. Parting with a $1 million amendment fee, Greenridge averted $6 million it would have made in payments towards the principal debt by June this year, as the new agreement revised the repayment schedule, deferring any principal or interest payments until mid this year, but requiring monthly payments after that until November 2023.

The firm also set forth that it is concurrently pursuing the sales of surplus real estate assets in the Spartanburg, South Carolina site, which should help reduce its financial obligations with B. Riley by an additional $6 to $7 million. CEO Dave Anderson remarked on the conclusion of the debt restructuring and the adoption of new hosting agreements. Specifically, he averred that the process had significantly enhanced the company’s liquidity position and empowered it to retain participation in the prospective gains associated with Bitcoin in the future.

Greenridge highlighted some of its financial and operating results of Q4 last year, revealing it generated $15 million in revenue, but suffered as much as $130 million in losses. It produced 683 Bitcoin in the three months, had $152 million of debt after subtracting debt-related expenses, and $16 million in cash and crypto assets.

Iris Energy plans a 4.4 EH/s increase to its hashrate

Australian miner Iris Energy is set to grow its hashrate to 5.5 EH/s in the coming months, surpassing its record before it unplugged machines used as loan collateral. The mining company previously defaulted on financed Bitcoin miners in November and consequently cut off an estimated 3.6 EH/s worth of machines that served as collateral.

Self-mining hashrate figures. Source: Hashrate Index

This increase from the current self-mining hashrate of 1.7 EH/s will be achieved by new S19j Pro machines the miner acquired after striking a deal – $67 million in Bitmain prepayments.

“We are delighted to have been able to utilize our remaining Bitmain prepayments to acquire new miners without any additional cash outlay,” co-founder and co-CEO Daniel Roberts said in an accompanying statement.

Iris doesn’t intend to scale its self-mining capacity beyond the 5.5 EH/s mark. Instead, it will shift focus to “growth initiatives and corporate purposes” after attaining the target.

Mining difficulty adjustment

The latest readjustment in Bitcoin mining difficulty came in the form of a 0.5% drop from its previous reading. After surging to a new all-time high (ATH) of 39.35 trillion in the last bi-weekly readjustment, the hashrate of the leading crypto has slashed slightly.

Bitcoin’s difficulty target changed to 39.16 trillion, a drop of 0.49%, with an average hashrate of 280.26 EH/s, according to BTC.com. The PoW network registered a hashrate of 315.9 EH/s on Sunday, 1.6% higher than two weeks before. The average hashrate computed over the last 2,016 blocks is around 279.6 EH/s, with an average block time of 10 minutes and 4 seconds.

The next retargeting of the difficulty is expected on Feb 26, presently estimated to rise 0.09% to 39.19 trillion. In mining pool distribution charts, Foundry USA leads the pack with a substantial 34.2% of the global hashrate – 99.73 EH/s. Antpool follows in second place with a 17.3% proportion, while F2Pool holds 14.8% of the total computational power. The third and fourth largest mining pools, Binance Pool and ViaBTC contribute 14.4% and 7.9% to the total hashrate, respectively.

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