05 Sep 2022

The public miners have less liquid balance sheets

The balance sheets of the public bitcoin mining companies reveal that most of them are in less liquid positions now than this spring.
Source: Public miners’ Q2 2022 filings, Yahoo Finance
Times are currently tough for bitcoin mining companies due to a combination of bitcoin price collapse, difficulty growth and rising energy prices. Although the public bitcoin miners are struggling and have been forced to sell significant amounts of their bitcoin holdings, none have gone bankrupt so far.The main reason the public miners have stayed afloat is that they held massive amounts of cash and bitcoin at the start of the summer. Throughout the summer, these companies have dumped their bitcoin and used some of their cash reserves to pay for miner deliveries and other expenses.We can measure a company’s immediate liquidity with the quick ratio, which is the liquid assets (cash and cash equivalents and cryptocurrencies) divided by the current assets.The chart on the right shows a comparison between eight public miners’ quick ratios during the spring and now. We see that for six of eight companies, the quick ratios have declined. It has declined the most for Marathon, just like we expected in the middle of the summer as the company struggled with weak cash flows.Still, most of these companies, including Marathon, are in sound financial condition. Only one is deeply struggling: Stronghold. Stronghold has a quick ratio of only 0.3 and also has negative working capital. It will still be challenging for the company to stay afloat the coming months, unless it gets saved by a bitcoin price rebound in shining armor.
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