Ki Young Ju, co-founder & CEO, CryptoQuant, has addressed the Bitcoin (BTC) miner capitulation in a series of tweets. He thinks a bullish trend might set in if US-based BTC mining firms and their crypto holdings are acquired at a lower price in 2023. But he also states such an event is less likely.
Saying it “might play out differently this time,” he tweeted:
https://twitter.com/ki_young_ju/status/1618015343674560517
Ki Young Ju goes on to state that the $BTC hash rate has soared lately, essentially due to the U.S. miners operating their “mining rigs at full capacity.” The reason it is so is they are required to “repay the financing debt owed on equipment it was leasing.”
Having the largest dominance since 2014, Foundry USA pool consumed 42% of the total hash rate for the last 24 hours, Ki Young Ju states. He says some Foundry USA pool-using mining companies (e.g. Core Scientific) have recently filed for Chapter 11 bankruptcy, while others have reported huge losses of late.
Ki Young Ju also reminds that Foundry USA is a DCG (Digital Currency Group) subsidiary. By doing so, he indicates how fragile Foundry USA is in regards to their FTX contagion risk. “Bitcoin hash price renewed a four-year low” recently, per Ki Young Ju. He indicates that BTC mining ROI is still abysmal.
Historically, Ki Young Ju states, small and mid-sized miners capitulate by selling all Bitcoins and mining rigs when they go “underwater.” But he thinks it might be different this time as the U.S. miners now are ‘institutional’ miners. If the entire mining company and their crypto assets are bought at a discount, it would not directly impact selling pressure in the markets.
It is still unknown if the bankrupt crypto companies and their assets would be acquired, he says. But he also states that if at all it happens, the systemic risk would be eliminated to a high degree. He hopes that TradeFi or other technology giants would acquire U.S. crypto firms and their crypto holdings at a discount in 2023.
