Hut8 CEO predicts a decrease in bankruptcies among Bitcoin miners this cycle

Hut 8 CEO Asher Gennot predicts that there will be significantly fewer Bitcoin mining companies filing for bankruptcy in the future compared to 2022. In an interview with Bloomberg on April 3, Gennot attributed the bankruptcies in 2022 to firms being overleveraged and unprepared for rising energy costs. Companies such as Compute North, Celsius Mining, and Core Scientific, which have since relisted on the Nasdaq, were among the Bitcoin miners that filed for bankruptcy during the crypto winter in 2022. However, Gennot noted that Bitcoin miners have now shifted towards relying on less leverage and obtaining more debt-free capital from equity markets to expand their businesses. He expects to see an increase in mergers and acquisitions (M&A) among smaller-scale Bitcoin miners, which he believes will lead to a lower rate of bankruptcies. Gennot explained that for significant M&A activity or “distress opportunities” to occur, Bitcoin would likely need to retrace to $30,000 or $40,000. The Bitcoin halving is scheduled for April 20, which will reduce miner rewards from 6.25 BTC to 3.125 BTC. Gennot stated that investors will gravitate towards large-scale operators with the lowest marginal cost of production following the halving. He cited his own experience of merging US Bitcoin Corp with Hut 8 Mining Corp in December, resulting in the formation of Hut 8 Corp, which currently holds over 9,100 Bitcoin valued at $600 million. Bitcoin is currently priced at $66,000, and historically, it has reached new all-time highs approximately 6-12 months after the halving event. However, Bitcoin recently surpassed its previous all-time high price of $68,990 on March 5, which occurred roughly 46 days before the halving. The launch of spot Bitcoin exchange-traded funds in the United States is believed to have contributed to Bitcoin’s unusual price action in recent months.