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 firms filing for bankruptcy in the future compared to the high number seen in 2022. Gennot attributes the bankruptcies in 2022 to firms being overleveraged and unprepared for rising energy costs. He highlights the leverage of 2021 as a major factor behind the distressed assets in the mining sector. Some well-known Bitcoin miners, such as Compute North, Celsius Mining, and Core Scientific, had to file for bankruptcy during the crypto winter in 2022. However, Gennot notes that since then, Bitcoin miners have been relying less on leverage and more on debt-free capital from equity markets to expand their businesses. He expects to see an increase in mergers and acquisitions among smaller-scale Bitcoin miners, which he believes will reduce the rate of bankruptcies. Gennot explains that for significant M&A activity or “distress opportunities” to occur, Bitcoin would likely need to retrace to $30,000 or $40,000. He also mentions that the upcoming Bitcoin halving, scheduled for April 20, will likely drive investors towards large-scale operators with the lowest production costs. Gennot cites his own experience of merging US Bitcoin Corp with Hut 8 Mining Corp as an example of this trend. The merged entity, now known as Hut 8 Corp, currently holds over 9,100 Bitcoin worth $600 million. Bitcoin is currently priced at $66,000, with the halving event approaching in 17 days. Historically, Bitcoin has reached new all-time highs around 6-12 months after the halving event, as seen in 2012, 2016, and 2020. However, Bitcoin recently surpassed its previous all-time high of $68,990 on March 5, around 46 days before the halving. Some experts attribute this atypical price action to the launch of spot Bitcoin exchange-traded funds in the US.