Offer 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.
The Bitcoin mining firm, Marathon Digital Holdings, obtained a revolving credit line of USD 100 million that was approved by the North American bank Silvergate Bank, as reported by CriptoNoticias this week.
This strategy of storing or hiding bitcoin has also been adopted by other listed mining firms, such as Riot, Bitfarms, Hut8, Greenidge, Argo, HIVE, Cleanspark and BIT Digital , as revealed by a report by 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 liquidating 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 about 30,000 Antminer S19j Pro miners from the Chinese manufacturer Bitmain since plans to have around 133,000 machines 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 guarantee part of his bitcoin funds to obtain a $ 25 million loan 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 its cash flow requirements, as reported by Argo in a statement.
The London-based firm also raised USD 112 million through a share sale. Argo has been collecting cash in recent months as the construction of a new bitcoin mining plant in West Texas is being planned , according to digital media reports.
Last month, the Canadian company Hut8 raised USD 150 million through a public offering of shares. The net proceeds of 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, for its part 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 of US institutions. The mining firm is deploying “capital to upgrade its fleet, open new facilities and embark on our global expansion,” as CEO Emiliano Grodzki reported on Twitter.
Vancouver-based Hive also expanded and upgraded its mining equipment for a $ 100 million financing program. For its part, Cleanspark, which is listed on the Nasdaq, raised USD 200 million in a public offering by entering the bitcoin mining ecosystem.
For Michael Saylor “the game has changed”
In September Riot did not sell any of its newly mined bitcoins. So much so that his reports caught the attention of MicroStrategy CEO Michael Saylor, who tweeted: “Riot Blockchain mined 406 BTC, sold none 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, it raised USD 3 million from a syndicate of moneylenders.
It is natural that the strategy that these nine mining companies are implementing captures the attention of Michael Saylor. Last July, the CEO of MicroStrategy revealed that holding bitcoin and basing spending on dollars is precisely the corporate strategy of the company he runs .
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 their holdings in bitcoin , especially when the market is bearish and the cryptocurrency loses value.