Bitfarms Noted Selling More BTC Than Production
Prominent bitcoin miner Bitfarms has witnessed disparity in its overall produced bitcoin (BTC) and sold crypto assets. Third quarter report of Bitfarms noted that it mined overall 1,515 BTC while sold out about 2,595 BTC within the same time-frame.
Selling bitcoin more than the production indicates the mining company’s intention towards making its position stronger. The strong position would be helping the company to survive the bear market—through cost cutting and reduction in debt obligations.
Although the miner had a loan of 55 million USD collateralized against its machines while another 23 million USD worth loan is against its BTC reserve.
Jaran Mellerud, known bitcoin mining analyst, said that although bitcoin sales helped Bitfarms to deal with the debt issue, the company has left with a lower amount of bitcoin (BTC). He further added that Bitfarms holdings consisted of 38 million USD in cash and about 2,064 bitcoin. Out of which, 1,724 BTC are placed as collateral, this leaves the company with 44 million USD worth liquidity.
Continued drop in bitcoin’s prices also plays a significant challenge for the company. The company has to retain about 125% worth collateral value against its loan amount.
Bitcoin analysts said the entire bitcoin holdings of Bitfarms stays at 2.064 BTC which equates to 141% of the loan amount. By this calculation, in case BTC falls to 14,200 USD, the loan over the company could get liquidated. The company has insufficient liquidity to financially support its expansion plans.
Third quarter report of Bitfarms suggested that the general and administrative expenses within the firm witnessed a decline of 15%. This led to 6 million USD, while excluding the non-cash compensations based on shares.
The analyst, however, praised the efforts the mining company made towards reducing the production costs. While at the same time, the administrative costs in comparison to its competitors remained lower.
Bitfarms was said to have a facility of cheaper electricity given the drastically lower price even than the general industry average of about 0.05 USD/kWh. Meanwhile the company expects about 0.027 USD/kWh in Washington while 0.03 USD/kWh in Argentina.
The most of its part comes from its facilities in Quebec, accounting for more than 80% of its overall revenue. However, the bitcoin mining firm has plans to spread its operations over the South America region while the bureaucracy acting as the main reason for its stalling.