During the cryptocurrency winter of 2022. Several Bitcoin miners, including Compute North, Celsius Mining, and Core Scientific, filed for bankruptcy. While Hut 8 CEO Asher Genoot remained optimistic about the future, particularly post-halving.
Genoot anticipates a significant decline in Bitcoin mining companies declaring bankruptcy in the years ahead compared to 2022. In an interview with Bloomberg on April 3, he attributed the past bankruptcies to businesses overleveraging themselves and failing to prepare for escalating energy costs.
Since then, according to Genoot, Bitcoin miners have shifted towards lower levels of leverage and relied more on debt-free financing from equity markets to fuel their growth. He expects a rise in mergers and acquisitions (M&A) among smaller miners, leading to a reduced bankruptcy rate.
Many businesses expanded as a result, and in 2022, when energy prices increased and Bitcoin prices dropped, they were unable to pay off their debt.
Genoot suggests that substantial M&A activity or “distress opportunities” would likely require Bitcoin to dip below $30,000 or $40,000. The impending halving, slated for block 840,000 on April 20, will reduce miner rewards from 6.25 BTC to 3.125 BTC.
Post-halving, Genoot predicts investors will favor “large-scale operators with the lowest marginal cost of production.” He exemplified this strategy with the merger of US Bitcoin Corp (USBTC) into Hut 8 Mining Corp via an all-stock merger in December.
Currently, Hut 8 Corp. in Miami holds over 9,100 Bitcoins valued at $600 million. With Bitcoin trading at $66,000, 17 days before the halving. Historically, Bitcoin has peaked 6-12 months post-halving. It defied this trend by surpassing its previous high just 46 days after the last halving, which some observers attribute to the launch of U.S. spot ETFs.
