PoW Mining – How are Large Outfits Faring During in a Down Market?

With Bitcoin price down more than 70% from its all-time high of $69,000 in early November 2021, mining companies have begun to struggle.

And in the currently turbulent market, with Bitcoin trading at around $20,000 and energy prices soaring, mining companies are facing serious issues.

Just last month, Core Scientific (CORZ) warned investors that it might have to consider bankruptcy. The month before that, crypto mining data center Compute North filed for Chapter 11 bankruptcy following the reports that it owed $500 million to at least 200 creditors.

So, now, let's take a look at other PoW mining companies!

Argo in Financial Trouble?

The shares of London-based Argo Blockchain (ARB) have fallen drastically after the reports of a deal to raise 24 million British pounds ($27 million) from a strategic investor have fallen through. ARB share prices are currently trading at $7.04, down more than 97.5% from its ATH in Feb. 2021.

Last month, the firm signed a letter of intent to sell 87 million shares to the investor in order to ease its liquidity pressures. Now, it is working to secure other deals to provide working capital for at least the next twelve months.

“Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations,” Argo said in a statement.

To secure short-term liquidity and preserve cash, Argo has sold 3,843 Antminer S19J Pros for $5.6 million. These miners represent ~384 PH/s of total hashrate capacity and are the last batch of the original Bitmain order scheduled for installation in October. As a result of this sale, the Company's total hashrate capacity now remains at 2.5 EH/s.

In response, Jefferies and Investment bank Canaccord Genuity have downgraded their stock ratings for the cryptocurrency mining company and lowered their price target to around $1, reflecting an expected drawdown of another 87% in ARB share prices.

Bitfarms Production Numbers

Crypto miner Bitfarms mined 486 BTC in October, up 1% from the previous month, and with that, it is on track to hit over 5,000 BTC mined in 2022. As of October 31, 2022, the Company held 2,064 BTC in custody.

The global Bitcoin self-mining company released its BTC production and mining operations update for October 2022, in which it noted that Bitfarms mined 53% more BTC in the first ten months of 2022 at 4,219 BTC than in the same period last year.

Without significant additions to capacity in hashrate than the previous month, Bitfarms averaged 15.7 BTC mined per day. During the month, the overall production was impacted by a 17% increase in network difficulty.

“The network hashrate is now responding quickly to changes in mining economics, which is a strong indication that we have found near-term support in Bitcoin mining economics as measured by US$ Revenue per TH/s,” said Ben Gagnon, Chief Mining Officer of Bitfarms.

Meanwhile, the Company is currently ahead of schedule on the activation of its two mining farms, Garlock farm and Phase 3 of The Bunker, to facilitate growth. Both will begin working at their full capacity in December.

Bitfarms still adjusted corporate guidance from 6.0 EH/s to 5.0 EH/s for Dec. to reflect high inflation and currency devaluation in Argentina and the impact of the country's macroeconomic environment on its ability to import miners.

“While we believe this restriction is temporary, we can't project the timing of its resolution and, accordingly, have reduced our 2022 year-end corporate growth target,” stated Bitfarms President and COO Geoff Morphy.

Hut 8 to Release Production Numbers Soon

North America-based Bitcoin miners, Hut 8 Mining Corp., is all set to release the results for the third quarter ending September 30, 2022, next week via a conference call. Two of Hut 8's digital asset mining sites are located in Southern Alberta, while the third one is in North Bay, Ontario, all located in Canada.

Much like other miners, Hut 8 is also affected by the ongoing bear market. As such, a portion of their equipment at Alberta sites is unprofitable to operate at current BTC prices. With the total network hash rate around 255 EH/s, this will likely drag on its October production.

In the second quarter of this year, Hut 8's adjusted operating costs per coin, excluding depreciation, went up to $18,900 from about $13,100 in the first quarter this year. Still, Hut 8 has a strong balance sheet and managed to expand its business without selling its mined BTC.

As for HUT's share price, it is currently trading just under CAD 3 (about USD 2.18), down 85% from its ATH almost a year back.

Sattva Focused on Expansion

Meanwhile, Crypto hosting and mining service company Sattva Block is doubling down on its global mining operations. The Company has launched multiple new mining sites, including one in Canada and two additional domestic sites in the U.S.

“Sattva brings industrial experience and scalability to something that, in relation to the next 30 years, is still a cottage industry,” said CEO and founder of Sattva, Maciek Pankowski, who called this fulfilling his “version of the American Dream.”

These mining sites will be rolled out in the last quarter of this year and into 2023. They will be providing premier hosting services by leveraging liquid cooling technology to increase the efficiency, hash rate, and environmental sustainability of mining operations.

Sattva is a leader in sustainable energy within the crypto sector, and for this, it leverages liquid cooling for energy recapture wherever possible. The Company believes liquid cooling is a logical next step for the crypto mining industry as its heat recapturing process is carbon neutral and impacts the local community and the environment.

“Liquid cooling is representative of a new standard of efficiency on all fronts,” said Pankowski. According to him, it is because of its “superior technology,” which is also more sustainable, that the Company has been able to generate more Bitcoin for its clients and, in turn, better returns for customers.

Aspen Creek – Compass Mining Collaboration

The Bitcoin mining hardware and hosting company Compass Mining has signed a 27-megawatt (MW) hosting partnership with Aspen Creek Digital Corporation (ACDC).

Compass Mining's clients will benefit from uptime and reliability through this partnership, said co-founder and co-CEO Thomas Heller in a statement, adding, “ACDC's pairing of cost-effective, renewable energy with mining operational excellence is difficult to find in today's current market.”

Compass Mining will be hosting approximately 9,000 units of Antminer S19 XP and S19j Pro on behalf of its clients at ACDC's newly launched Texas site in Q4 of 2022, making Compass the largest hosting client for Aspen Creek.

ACDC's Texas facility is 30MW in size and co-located behind the meter with a newly developed 87 MW solar energy facility. The project represents additional power generation resources for the Electric Reliability Council of Texas (ERCOT), along with valuable controllable load resources to expand the reach of renewables by stabilizing the grid.

Founded in January, Aspen Creek recently raised $8 million in Series A funding led by Polychain Capital and Galaxy Digital despite the bear market. The start-up miner's use of renewable energy and its “power first” approach, which involves securing the infrastructure before raising capital, garnered the attention of investors.

Digihost is Profitable

US-based Bitcoin miner Digihost Technology Inc. mined 74.58 BTC in October of 2022, an increase of 78% from the same period last year. During this month, the Company also sold a portion of its BTC production to fund its energy costs.

At the end of October, the Company held 118.16 BTC, 800.89 ETH, and $3.42 million in cash. Digihost noted in its report that they remain debt-free and cash-flow-positive as of October 31, 2022.

“Despite current volatile economic conditions, Digihost has been able to maintain good liquidity levels of cash and crypto holdings on a month-to-month basis relative to the size of our operations,” said Michel Amar, Chairman, and CEO of Digihost.

Even if the current market conditions persist, the company “expects to continue to generate positive cash flow from operations to fund its existing development initiatives,” added Amar.

Currently, Digihost is moving forward with closing approval requirements for the 60MW North Tonawanda power plant acquisition, which will increase its operating capacity by 150%.

The build-out of their Alabama Site is also on the schedule for completion this year, resulting in an additional mining capacity of approximately 550 PH. For this site, it has secured a $1.3 million surety bond with Alabama Power Company for electric service.