Report: $4B in Bitcoin Mining Loans Are in Distress – JPMorgan Analyst Says Price Pressure Stems From Miner Sales

The price of bitcoin ( Bitcoin) has fallen 21% from two weeks ago. This has harmed BTC miners greatly. report by Bloomberg shows that many loans backed with mining machines are in danger.

Ethan Vera, Luxor’s director of finance, estimates that $4 billion worth of loans backed by mining equipment is under stress. Vera told Bloomberg’s David Pan that they are worried about their loan books, particularly those with high collateral ratios.

According to statistics, only 14 SHA256 mining rigs that are based on Bitcoin exchange rates are making a profit with an electrical cost around $0.05 per hour (kWh). Microbt and Bitmain are the top-selling mining machines, generating between $2.50 and $4.50 per hour with an electrical cost around $0.05 per kWh.

It is noted that miners are selling BTC in order to boost operational costs. Core Scientific Inc. also highlighted that Core Scientific Inc. had sold more than 2,000 BTC to cover operational expenses in May.

According to Luka Jankovic (head of lending at Galaxy Digital), “Bitcoin miners are, generally speaking, feeling pain.” At these levels, a lot of operations have seen their net IRR drop to zero. Jankovic said that machine values have dropped and are still in price discovery mode. This is compounded with volatile energy prices and limited availability for rack space.

Analyst at JPMorgan Says That Bitcoin Miners Continue To Put Pressure on The Price

Bitcoin miners have traditionally had to sell their holdings during bear markets. This puts more pressure on the price. According to another report, Nikolaos Panigirtzoglou from JPMorgan explained why bitcoin miners who need to sell will not be affected by the recent downward pressure on BTC market.

Panigirtzoglou believes that private-held miners could have sold large amounts of block subsidies to offset operational costs. Numerous reports have shown that miners are selling large amounts of BTC from February 2022.

The team of onchain analysts from Glassnode explained that Bitcoin miners had been net distributors after the recent sell-off. “Miners balances have been declining at a peak rate between 5k and 8k per monthly ($150M to $240M @ $30k ).

A few crypto lenders have been experiencing severe stress over the last week and are currently facing liquidations. Celsius, a crypto lender, has been subject to scrutiny by the crypto community for rumors of restructuring and insolvency and liquidations.

If prices fall below today’s exchange rate, loans tied to the BTC mining sector may cause miners to sell more BTC.

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