Bitcoin miners sell BTC to cover their dollar obligations, Core Scientific CEO says
- Core Scientific CEO Mike Levitt says Bitcoin miners have to sell to improve liquidity as well pay debts.
- The company sold over 7,000 bitcoins in June, adding more than $167 million cash to its balance sheet.
- Levitt also commented on Tesla's move to sell its bitcoins.
Core Scientific CEO and co-founder Mike Levitt says the crypto market space is indeed feeling the heat of the crypto winter, with a price crash across cryptocurrencies impacting mining companies’ decisions to sell their Bitcoin holdings.
Levitt, whose company is the largest US-based Bitcoin miner by hashrate, believes the crypto industry is still in a nascent stage of growth and that periods such as these – when there is “some rationalisation and cleansing occurs” – do happen.
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He noted in an interview with Bloomberg that the tumultuous times that have hit the market have come amid massive pressure, including macro-economic and on technology. It’s an environment that has also impacted the crypto mining industry, with Bitcoin miners resorting to selling their BTC holdings to help with company liquidity and to repay key debts.
Bitcoin mining firms need to cover cash obligations
As crypto prices plummeted, miners (usually key hodlers)increasingly sold their holdings, with May and June seeing massive dumps.
Core Scientific reportedly sold 7,202 BTC to raise $167 million, disposing of their holdings at the average price of $23,000. They were not alone as several other top mining firms including Bitfarms and Riot Blockchain have also sold BTC.
But the Core Scientific chief executive says that the company does not “regret” selling a huge chunk of their holdings at the time.
He told Bloomberg that his company currently produces nearly 1,200 bitcoins a month and that they are already ramping up production. The company, like any other in the production business, has to sell to generate income that goes into other aspects such as payment of bills.
“We produce bitcoin, but our obligations are in dollars,” he explained, adding that the goal is to “generate enough” of these (dollars) to cover the bills.
Other than that, the current market environment requires that companies have enough liquidity, which basically is intended to ensure they can navigate the downturn and survive. The flexibility that comes with being “more liquid” is also another reason companies are selling their bitcoin, he added.
For Nasdaq-listed Core Scientific, this is certainly the case and it’s a strategic move that allows them to take advantage of the opportunities likely to arise in the market.
Levitt also commented on the move by Tesla (TSLA) to sell 75% of their bitcoin holdings over the second quarter 2022, noting that this was the “smart move” to take given the current market environment.
He says he understands why the electric car maker would need to have more cash on its balance sheet, especially amid all the volatility and uncertainty around the markets.