Far fewer Bitcoin ( BTC) mining companies will declare bankruptcy in the coming years than in 2022, says Hut 8 CEO Asher Gennot.
In an April 3 interview with Bloomberg, Genoot said that the main reason for bankruptcies in 2022 will be companies' excessive debt and lack of preparation for rising energy costs.
"The big area that led to a lot of bankruptcies in the mining sector and distressed assets was due to leverage in 2021." - Genoot said.
"This allowed many companies to grow, and the debt could not be repaid in 2022, when Bitcoin prices fell and energy prices rose."
Compute North, Celsius Mining and Core Scientific - which has since relisted on the Nasdaq - were among several Bitcoin mining companies that declared bankruptcy during the crypto winter of 2022.
However, Genoot said that since then, Bitcoin miners have typically relied on lower leverage and larger volumes of non-debt capital coming from equity markets to grow their businesses.
He expects an increase in mergers and acquisitions (M&A) among smaller Bitcoin miners, which he said will contribute to a much lower bankruptcy rate.
Bitcoin would likely have to return to the $30,000 or $40,000 level for a significant amount of M&A or "distress opportunities" to occur, Genoot explained.
