Offering bitcoin (BTC) as collateral to request a loan from a financial institution or the public sale of shares. That is the strategy being implemented by nine of the largest companies dedicated to digital mining in the United States and Canada.
Bitcoin mining firm Marathon Digital Holdings secured a $ 100 million revolving credit line that was approved by North American bank Silvergate Bank, as CriptoNoticias reported this week.
This strategy of storing or hiding bitcoin has also been adopted by other publicly traded mining firms, such as Riot, Bitfarms, Hut8, Greenidge, Argo, HIVE, Cleanspark and BIT Digital, as revealed by a report from The Block.
These nine companies have stored more than 20,000 bitcoins equivalent to USD 1 billion at the current price of the cryptocurrency on the market. Then, with their treasuries full of BTC, they have applied for a dollar loan or sold shares to pay utility bills, pre-order new equipment, or expand their facilities.
None of these companies plan to liquidate their bitcoins, on the contrary, They are betting that the price of the cryptocurrency will continue to rise. Therefore, they rely on the traditional financial system based on monetary issuance and inflationary pressure, to invest it in mining farms that extract bitcoin focused on scarcity.
Marathon, for example, will use its Silvergate Bank approved line of credit to finance the ASIC equipment it will receive soon to expand its fleet. The firm bought some 30,000 Antminer S19j Pro miners from the Chinese manufacturer Bitmain as plans to have some 133,000 computers operating by 2022 to bring its hash rate to 13.3 EH / s.
The dollar as a source of financing to mine more bitcoin
Argo Blockchain, for its part, offered as collateral part of its funds in bitcoin to obtain a loan of 25 million dollars from Galaxy Digital. The company will use the amount received to finance the expansion of its data center located in West Texas, and to meet your cash flow requirements, as per Argo reported it’s a statement.
The London-based firm also raised $ 112 million through a share sale. Argo has been collecting cash in recent months since Construction of a new bitcoin mining plant in West Texas is considered, according to informed by digital means.
Last month, Canadian company Hut8 raised $ 150 million through a public offering of shares. The net proceeds from the offering will be used to support the growth of its business, including to finance capital investments in mining equipment and to increase its mining capacity.
BIT Digital, on the other hand recently closed a private placement of USD 80 million. The company plans to raise its hash rate and other actions focused on its growth.
At the beginning of the year, Bitfarms raised $ 30 million in a private placement from US institutions. The mining firm deploys “capital to upgrade its fleet, open new facilities and embark on our global expansion”, as reported in Twitter its CEO Emiliano Grodzki.
Vancouver-based Hive, too expanded and updated its mining equipment for a financing program of USD 100 million. For its part, Cleanspark, which is listed on the Nasdaq, raised $ 200 million in a public offering upon entering the bitcoin mining ecosystem.
For Michael Saylor “the game has changed”
In September Riot did not sell any of its freshly mined bitcoins. So much so that his reports caught the attention of MicroStrategy CEO Michael Saylor, who tweeted: “Riot Blockchain mined 406 BTC, did not sell any of its production and ended the month with 3,534 BTC on its balance sheet. Publicly traded Bitcoin miners are not selling their bitcoins, they are hoarding. The game has changed ”.
This company also followed the strategy of financing itself in dollars. In 2019, he raised $ 3 million from a syndicate of moneylenders.
It is only natural that the strategy these nine mining companies are implementing catches the attention of Michael Saylor. Last July, the MicroStrategy CEO revealed that holding bitcoin and basing spending on dollars is precisely the corporate strategy of the company you run.
So the way MicroStrategy handles volatility is by making sure it has enough dollars to pay for business expenses for the next 12 months. This with the idea of having a margin of action, without having to liquidate your bitcoin holdings, especially when the market is bearish and the cryptocurrency loses value.