Not bothered: Miners ‘not impacted by volatility’ in Bitcoin market

Published at: May 12, 2022

Despite the steadily declining prices of Bitcoin (BTC) and turmoil on the markets today, some of the largest mining companies are unfazed and insist their operations will not be affected by negative price volatility.

Some even see it as an opportunity to gain market share as smaller competitors collapse.

Bitcoin prices have been on a steady decline all year up to the past 24 hours, when the crash accelerated to reach the lowest point since December 2020. However, miners have not been deterred amid that tremendous pressure. Some may even have more fervor for mining if the downtrend in Bitcoin continues through 2022.

Each of three different mining operations — two large public companies and one private mining company — that Cointelegraph reached out to shared chilled emotions about the prospects of a bear market. They believe it will have little to no effect on their business plans.

Bitcoin miner Marathon Digital Holdings said that its “asset-light strategy” will keep it insulated from nearly all the effects of a bear market. Charlie Schumacher, vice president of corporate communications of Marathon Digital, told Cointelegraph that it maintained a cost basis of about $6,200 per BTC mined in Q1 by “outsourcing the muscle of our operations and keeping the intellectual power within the firm.”

Marathon is the third-largest holder of Bitcoin among public companies, according to BitcoinTreasuries. It has the capacity to generate 3.9 exahashes (EH/s) of hashing power. Marathon Digital stocks are down 15.42% and are trading at $9.97 in after-hours trading. It is down 92.6% from its December 2014 high of $134.72.

Schumacher added that the exit of other miners due to capital constraints during bear markets creates an opportunity for larger operations like Marathon’s, which can take advantage of lower mining difficulty from a decrease in hashing power and competition on the Bitcoin network:

“As the hash rate declines, there’s a downward difficulty adjustment, which decreases the energy expense for miners who remain hashing. Those who are left standing can therefore benefit by potentially earning more Bitcoin.”

Cointelegraph also received responses from Jason Les, CEO of Riot Blockchain — another large mining company. It currently holds the eighth-most BTC among public companies, according to Bitcoin Treasuries. It controls 3.9 EH/s of hashing power as of March 4 but did not disclose its cost per coin mined.

Riot Blockchain stocks are down 9.16% and are trading at $6.83 in after-hours trading. It is down 90.5% from its February 2021 high of $71.33.

Les also appeared nonchalant about current and future Bitcoin market volatility. Like Marathon and Redivider, Les pointed to his company’s “strong balance sheet with no long-term debt” as key strengths it can rely on from a business perspective. He added that “changes in Bitcoin market conditions do not impact our miner deployment plans, so we continue to grow our hash rate monthly:”

“Riot’s miner deployment plans are not impacted by volatility in Bitcoin, we are focused on building a sustainable business that operates in array Bitcoin market conditions.”

Tom Frazier, CEO of Redivider, is also untroubled by the prospect of a further prolonged downturn. Redivider is a privately-run data center provider for Bitcoin mining operations specializing in Opportunity Zones designed to benefit workers in underprivileged regions of the United States.

The core of Redivider’s 1.5-year-old business is in managing data centers whose Bitcoin hashing power can be rented by mining companies for a fee. Frazier told Cointelegraph on a Wednesday call that if its data centers have no renters at a particular time, Redivider can maintain a revenue stream for all of its facilities at any given time by assuming the hashing power and block rewards for themselves.

He did not disclose what Redivider’s basis price per Bitcoin mined was nor how big its operation is, but he assured Cointelegraph that “our BTC production price won’t be impacted.”

Frazier said that downturns in the Bitcoin market “have little impact on what we do due to our 10-year plan:”

“Corrections in the market are happening because BTC is very volatile, which is in line with any other volatile asset class. That volatility will not impede our strategy. These moments present opportunities.”

Considering the present turmoil in the crypto markets following the collapse of the Terra project and Bitcoin currently trading at $28,931, its lowest level since January 1, 2021, according to CoinGecko data, it may become rapidly apparent whether miners can pounce on the opportunity at their doorsteps as they claim.