Counting on cheap electricity is a great advantage when carrying out activities during bear markets. Showing a low debt/equity ratio also benefits the permanence of mining entities.
Bitcoin (BTC) miners got forced to face new adaptation behavior after the entire crypto market went through a price decline that is still active and damaging to investors. The increase in mining got also included, which minimizes the performance of the hardware to keep the Bitcoin network in constant and fluid work.
For better or worse, two factors profoundly impact the solidity of a Bitcoin mining entity during bear markets: the electricity cost and solvency regarding its financial operations.
The price that the administration of a country or a private entity establishes for the electricity is beyond users’ control. However, there are new alternatives that Bitcoin miners can execute to fight against the blows that the bear market may be taking on their financial structures.
One of the possible solutions, and the simplest, is to use hardware that mines more efficiently and even configure it at the software level to optimize your work even more. A recent report by Arcane Research compares the cash flow, or cash flow, per bitcoin offered by mining with an Antminer S19 and an Antminer S9.
Investing in updated hardware makes the profitability of mining reach high peaks because the advancement of technology allows them to carry out mining activities with greater potency using less energy.
Starting and growing a mining entity requires a lot of investment in infrastructure. This situation often obliges owners to opt for loans and other financing tools to achieve their goals. The real struggle comes when payments begin to disappear or when the decline in profitability generates expenses that might surpass net profits.
Evaluating each financial commitment that the company considers acquiring is crucial, and these are approved if they are essential for its support and growth. In this way, if the market goes through a bearish stage, the chances of overcoming a situation like this one and generating profits are more extraordinary.
The Best Prepared Mining Companies to Fight against a Bearish Market
The Arcane Research report talks about the Bitcoin mining entities that, according to them, are well equipped to resist the subsequent downtrend that the market is going through.
According to Arcane Research, Riot Blockchain appears to be the most prominent entity in the face of the low profitability that Bitcoin mining presents today.
Riot Blockchain is the entity that counts on the cheapest electricity service on the list. Paying just $24 per MWh allows Riot to save around 30% of what Hut and Core Scientific (other companies in the industry) spend on electricity. This situation already relies on a significant advantage in profitability regarding BTC mining because it is an activity that needs a huge amount of energy.
Another factor to consider is that Riot Blockchain goes far beyond other mining entities in the solvency of its finances, according to data brought by Arcane Research. The debt/equity ratio shows how solvent an entity should be when it comes to financing its assets. The higher this value, the greater the risk of its investors and shareholders, so Riot, with 0.1 in its debt/equity ratio, looks like the most reliable company in this regard.
By: Jenson Nuñez
