- Bitfarms’ current bitcoin holdings stand at 3,349 BTC, down from more than 6,000 BTC in May
- The firm used some of the cash to pay off bitcoin-backed loans from Galaxy Digital
Bitfarms has ditched its “hodling” strategy and begun selling its mined bitcoin (BTC) to pay off loans and shore up its balance sheet.
The Toronto-based cryptocurrency miner sold 3,000 BTC ($62 million) in the past week, it announced on Tuesday. Bitfarms is “no longer HODLing all our daily BTC production,” Jeff Lucas, the miner’s CFO, said.
“We believe that selling a portion of our BTC holdings and daily production as a source of liquidity is the best and least expensive method in the current market environment,” he added.
Since May, Bitfarms’ BTC holdings have shrunk by almost half to 3,349 BTC ($67.5 million). The firm is currently mining around 14 BTC ($282,000) per day over the month to date.
Bitfarms said it used some of those proceeds to reduce its bitcoin-backed credit facility with digital asset bank Galaxy Digital by 42%, now down to $38 million.
Indeed, selling bitcoin to cover expenses is becoming par for the course for cryptocurrency miners, especially those who had taken out loans to fund their rapid expansion over the past year.
Bitfarms’ move mirrors competitor Riot Blockchain, which has sold 700 BTC for over $17.5 million since March. In May, Marathon Digital’s Chief Financial Officer Hugh Gallagher said it too may consider selling some of the bitcoin it holds for treasury management or general expenses.
Bitcoin miners also dumped their holdings faster than usual in May, according to Arcane Research analyst Jaran Mellerud.
Arcane found the top 28 publicly-traded miners sold 4,271 BTC last month, representing a 329% month-on-month jump — and they’re likely to sell more in June, Bloomberg reported.
Fears of contagion from the asset liquidations of Three Arrows Capital have pulled crypto prices lower, with bitcoin reaching lows of $17,600 this week before recovering above $20,000. The bellwether digital asset last traded at $20,400 as of Wednesday morning, according to data from Blockworks Research, almost 60% below its value at the start of the year.
Crypto mining stocks are generally tightly correlated with bitcoin prices. Share prices for both Riot and Marathon — the two largest public mining companies — have collapsed 80% so far this year while Bitfarms has fallen 73%.
The sense of euphoria that enabled bitcoin’s all-time high of $68,900 in November 2021 is missing right now, said Brian Gould, head of trading at Capital.com.
“Traders in crypto have had to take a cold shower, and building that euphoric momentum to reignite the uptrend will take a lot of energy and influence that we’re not seeing,” he said.
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