Another prolonged collapse of the crypto market is now a cause for concern not only for investors but also for miners.
The crypto market decline is making it more difficult for some miners to repay as much as $4 billion in loans. This poses a potential risk to major cryptocurrency lenders. Currently, the value of most of the mining rigs accepted as collateral has halved in value along with the price of Bitcoin. This has led to serious challenges for the industry. While only a few miners have defaulted on their obligations, an increase in the number of miners selling off their Bitcoins means that there could be growing distress in the sector. Notably, in May, Core Scientific sold more than 2,000 BTC coins to cover increasing operational costs.
If the market situation does not improve, analysts warn it could be an ugly scenario. Selling Bitcoin reserves puts further pressure on prices. At the same time, the cost of equipment could fall even lower. The popular Bitmain S19 mining rig has lost 47% of its price since November 2021, when the rig was valued at $10,000.