The recent drop in bitcoin (BTC) prices, which severely impacted the profitability of mining, forced companies dedicated to the activity to modify their internal business strategies. This, as a way to get around the crisis that hit the market between May and part of June. How they did it?
Bitfarms, a company that has a presence in Latin America, more precisely in Paraguay and soon in Argentina, explained in a release how he managed to strengthen himself in the midst of the crisis that led to the profitability of Bitcoin mining in the rednot seen since October 2020. The document was titled “HODL Strategy Adjustment.”
This company, headquartered in Canada, sold 3,000 bitcoins from his portfolio, worth an estimated $62 millionwhich contributed directly to the company’s liquidity.
In addition, they closed a financing agreement with the NYDG company, specialized in Bitcoin financial services, valued at USD 37 million.
Both moves added $100 million in liquidity to Bitfarms with no apparent impact, as they said, They currently have about 3,349 BTC held after the massive sale of bitcoinsincluding monthly production, which averages about 14 BTC.
Meanwhile, and as part of its strategy, the company decided to allocate a portion of the mined bitcoins to rebalance the debtreducing the BTC-backed line of credit it holds with Galaxy Digital to $38 million.
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According to Jeff Lucas, CFO of Bitfarms, the measures taken respond to the extreme volatility seen in recent days. “While we remain bullish on BTC price appreciation in the long term, this strategic shift allows us to focus on our top priorities of maintaining our world-class mining operations,” he defended.
The executive explained that selling a portion of BTC holdings and daily production as a source of liquidity “is the best and least expensive method in the current market environment.”
Did it have to do with the drop in the price of bitcoin?
According to Bitfarms, the sale of the 3,000 bitcoins took place last week, although they do not clarify when. In any case, it happened when BTC accentuated its fall and reached an annual low of USD 17,500.
Bitfarms, the mining company, falls into the range of what is known as a “whale”, which is an entity with a huge amount of accumulated bitcoins, capable of generating movements in the market with their purchases or sales.
If it’s true what they say this company had about 6,500 bitcoins held until the day they sold practically 50% of their holdingsenough to cause an imbalance in the market equilibrium, even if it is very small.
This scenario may have added to the other sell-offs that were reported as BTC fell, as suggested by the money flows that have moved to exchanges, shown by firms like Coin Metrics.
This cryptocurrency market analysis firm ensures that some 140 thousand bitcoins (USD 2.8 billion) were deposited on the exchanges of cryptocurrencies only on Saturday, June 18, the day when bitcoin fell and touched USD 17,000 for the first time in more than 12 months.
Although it is not known if they were sold, the truth is that exchanges are the platforms par excellence to exchange and sell cryptocurrencies like bitcoin, which just that day was going through one of its worst recorded crises so far in 2022 and from which it recovered a few hours later.