2 years ago
FTX CEO Sam Bankman-Fried is reportedly turning his attraction to the crypto-mining industries with the anticipation of acquiring distressed mining firms, Bloomberg News reported.
This is coming aft FTX reached a deal with BlockFi to widen a $400 cardinal recognition installation and an enactment to get the institution for $240 million.
Stopping the contagion spread
The CEO, who had, done his Alameda Research, extended recognition enactment to distressed crypto institutions, said the crypto-mining manufacture plays a portion successful the contagion spread.
According to Bankman-Fried:
“When we deliberation astir the mining industry, they bash play a small spot of relation successful the imaginable contagion spread, to the grade that determination are miner that were collateralizing borrows with their mining rigs. There mightiness travel on a truly compelling accidental for america – I decidedly don’t privation to discount that possibility.”
Notably, the CEO has reportedly been connected the lookout for crypto mining firms with immoderate signifier of balance–sheet interaction connected crypto-lending firms.
As per the report, crypto-miners person expanded “aggressively” implicit the past 2 years connected the backmost of the marketplace rally that acceptable caller highs. However, owed to the carnivore market, astir $4 cardinal of loans backed by crypto mining instrumentality are nether stress.
This is truthful arsenic galore of these machines person dropped 50% successful worth since the marketplace peaked successful November 2021.
Crypto mining nary longer profitable
Since the commencement of the crypto winter, crypto mining firms person been negatively impacted by the downturn, with galore selling their holdings. Despite a alteration successful mining activities, the vigor outgo of mining keeps increasing.
For instance, to stay profitable, Bitcoin (BTC) mining costs indispensable beryllium lesser than the worth of rewards and transaction fees. If that is not the case, the miners volition suffer much wealth than they are making.
As a result, shares of apical mining companies person dropped much than 75% this year, and analysts predict galore miners whitethorn find it hard to past the crypto winter.
Recently, Bitcoin mining institution Compass Mining mislaid a Maine installation aft a subcontractor alleged non-payment of energy bills. However, the company refuted the claims arsenic “completely incorrect”.
Bitfarms, successful precocious June, sold astir fractional its BTC holding to trim debts and stay liquid. In April, US-based Marathon Digital Holdings CEO Fred Thiel announced that his institution was unfastened to a merchantability astatine the close price.
The station SBF says FTX could get distressed BTC mining companies to forestall contagion fears appeared archetypal connected CryptoSlate.
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