The catastrophic meltdown that occurred in the cryptocurrency market in May is still being investigated for its far-reaching consequences.
Bitcoin mining company Stronghold disclosed yesterday in a quarterly earnings report that it had reached a deal with creditor New York Digital Investment Group (NYDIG) and another partaking broker to give back approximately 26,200 mining machinery and equipment in return for the closure of $67.4 million in debt. The deal was concluded public by Stronghold.
In addition, yesterday, a commitment was given to Stronghold by lender WhiteHawk Capital to reorganize and expand its existing equipment financing agreements. This is a move that will give the Bitcoin miner an additional borrowing capacity of up to $20 million. Stronghold received this commitment yesterday.
When taken together, these agreements, along with a restructuring of the convertible notes, will result in a $79 million reduction in Stronghold’s total debt.
That amounts to 55% of the company’s total debt; the remaining debt of $64 million will not be paid off.
Bitcoin Mining Market in a Bear Market
This action comes as cryptocurrency companies are continuing to assess the debilitating effects of the crash that occurred between May and June, which, in many respects, is still ongoing.
Even though Bitcoin made a brief recovery to $25,000 not long ago, the top cryptocurrency is still down 65% from its all-time high of $69,044.77 that it reached in November 2021. According to data provided by CoinMarketCap, the price of one bitcoin is currently at $23,821.80.
Bitcoin miners like Stronghold, which have to pay enormous overhead costs for their equipment and energy to manufacture the blue-chip cryptocurrency, have been crushed by the dramatic decline in the price of Bitcoin.
Other Bitcoin miners have resorted to selling their Bitcoin holdings to survive the fall. This is an unexpected move for some of the industry’s most ardent HODLers, who have been holding Bitcoin since its inception.
According to a report by Arcane Research, Bitcoin miners dumped approximately 15,000 BTC into the market during June. This represents an astounding 400% of their monthly Bitcoin production. In July, that number dropped to 6,200 BTC, indicating that it had been decreasing.
Nevertheless, that accounts for 158 percent of the Bitcoin mined by these miners, which signifies that they are in a precarious financial position.
What Are the People at Stronghold Saying?
However, rather than liquidating its Bitcoin reserves, Stronghold decreased its debt by selling off its mining equipment. The corporation is adamant that this will not affect its ability to produce bitcoins over the long run.
Stronghold’s co-chairman and CEO, Greg Beard, said in a statement that the current position of the company “provides additional availability for us to patiently and opportunistically acquire Bitcoin miners at currently depressed prices.” Stronghold is a cryptocurrency that is used to pay for goods and services.
He also made a passing reference to several alternative income sources that the corporation might be able to utilize in the interim to continue earning revenue.
Beard stated that even though their power generation capacity had not changed, they had greatly increased their open exposure to robust power markets. This was even though their Bitcoin mining fleet had been reduced in the short run.
“Regardless of our mining fleet size, forward pricing suggests that selling power is a compelling option for mining Bitcoin. This is the case even though…”
Yesterday, following the news of the mining equipment sell-off, Stronghold’s stock experienced a drop of 17.55 percent. At the time of this writing, the share price was $3.19, reflecting a significant decrease of 75.76% year to date.
More Stories: Celsius CEO Alex Mashinsky Took Risky Decisions, Causing a $50M Loss