Key facts:
Marc Bosch, a Bitcoin miner, suggests that the default does not pose a threat to the industry.
Thinking with a “cool head” is necessary before collateralizing mining operations, according to Bosch.
The drop in the price of bitcoin (BTC), which has dragged down the valuation of mining equipment, has caused alarm among the mining community. Companies seem to be on the verge of default due to the margin calls, which, in the worst case, could lead to the unrestricted sale of ASIC devices. The question is, does this pose a threat to the industry?
Marc Bosch, an engineer and Bitcoin miner, thinks not. In an exclusive interview with CriptoNoticias, the operator, with equipment installed and mining from Europe, explained that even If the default came, the Bitcoin network would remain completely secure.so there is no risk in that sense.
“Bitcoin mining is not a sector that is threatened by some companies defaulting,” Bosch said in our interview, adding that the threat is more about “the companies and their own profitability.”
But the security of the network and the hashrate is at all-time highs and that means that the security is impeccable. And even if several of these companies defaulted, there would still be many non-collateralized miners who could continue their operations.
Marc Bosch, Bitcoin miner.
What relationship do margin calls have with miners?
Bosch explained in a call with this newspaper that after the events of LUNA, Terra, Celsius and other projects now vanished, there is a “new trend of fear, uncertainty and doubt (FUD) in the market towards Bitcoin miners”.
And it is that the miners who have been big players this year, requested collateralized loans and as collateral they put their own machines to be able to secure their operations or open new operations. This, along with the drop in prices and the lack of a drop in mining difficulty, has caused the machines to drop in price. And they have come to be worth half of what they were worth six months ago. Therefore, all the companies whose collateral has been based on the value of these machines, have not been able to sustain their operations..
Marc Bosch, Bitcoin miner.
These companies, to try to compensate for the crisis, have two optionsaccording to Bosch: “they would have to sell the machines that are not yet plugged in or they would have to sell their bitcoins in order to maintain the value of their company or continue to maintain their operations.”
But if they sell their bitcoins, it would create “very big” pressure from the miners, which would push down the price of the coin, since they “have a lot of BTC” in their wallets. This would be counterproductive for the operators, “because there would be no way to recover the capital spent”.
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Which companies are at risk?
According to Bosch, Bitcoin mining companies that are at risk of falling into default they are those who did not manage their risks well and who did not think “with a cool head”.
“The companies that today are at risk of default is because they were at a time when everything was very beautiful (bull market) and they got carried away by emotions,” he said in the interview.
This scenario is not shared by the companies that did invest with prior evaluation, since these “they would have no problem even if the price of BTC drops to $10,000”Bosch maintained.
Marc Bosch, a Bitcoin miner, calls for “knowing when you are” before collateralizing operations. “There are many variables to take into account and if all of these are fulfilled, even putting yourself in an extreme case, it can still be profitable to mine Bitcoin, they can be operations that make sense”he indicated.