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A recent avalanche of news reports about major cryptocurrencyplayers filing for bankruptcy could take a toll on the industry, whichis already battling price uncertainties. These stories could indicatethat the rout in cryptocurrency prices may be weighing heavily oncompanies.
Bankruptcies In The Industry
The sector has recentlyreceived shocking news stories of Bitcoin (CRYPTO: BTC) miner Core Scientific Inc. (NASDAQ: CORZ) warning that it won’t be able to pay its debt,sending the company’s shares plummeting by 76%.
According to aSecurities and Exchange Commission (SEC) filing , CoreScientific will not be able to make debt payments due in October andNovember. The company said it is exploring alternatives to its capitalstructure and is working with financial and legal advisers, but notedthat it might have to file for bankruptcy.
The industry was hit with another such newsreport when Compute North Holdings Inc., one of the largest operatorsof crypto-mining data centers, announced on Sept. 22 that it had filedfor bankruptcy and CEO Dave Perrill had stepped down.
As if that was notenough, Iris Energy Limited (NASDAQ: IREN) – an owner andoperator of institutional-grade, proprietary Bitcoin-mining datacenters – highlighted some recourse equipment financing issues in its Nov. 2 Financing andBitmain Prepayment Update.
“The limited recourse equipment financingarrangements have been a recent focus for us. We remain committed toexploring a way in which we may be able to allow the lender to recoverits capital investment,” Iris Energy Co-Founder and Co-CEO DanielRoberts said.
“However, we are also mindful of the current market and thatthese arrangements were deliberately structured to minimize anypotential impact on the broader group during a protracted marketdownturn.”
Bitcoin mining companies such as Core Scientific, ComputeNorth, Riot Blockchain Inc. (NASDAQ: RIOT) and CleanSparkInc. (NASDAQ: CLSK) often take on debt to remain competitive in abusiness with huge capital expenditures in the form of electricitycosts, facilities and mining equipment.
Some companies, like Iris Energy, ComputeNorth and Core Scientific, have become cash-strapped because of risingelectricity costs and tumbling cryptocurrency prices. These bankruptcystories seem to highlight that there may be extreme financial andinfrastructure undersupply in the cryptocurrency miningsector.
Any Bright Spots in the CryptominingIndustry?
With a growing undersupply of crypto mining infrastructure, Mawson Infrastructure Group Inc. ’s (NASDAQ: MIGI) large-scaleexcess infrastructure capacity could provide some hope for theindustry.
Mawson is a digitalinfrastructure provider with multiple operations throughout the U.S.and Australia. The company’s vertically integrated model is based ona long-term strategy to promote the global transition to the newdigital economy.
Mawson says it matches sustainable energy infrastructure withnext-generation mobile data center (MDC) solutions, enabling low-costBitcoin production and on-demand deployment of infrastructureassets.
With astrong focus on shareholder returns and an aligned board andmanagement, Mawson could emerge as a global leader in environmental,social and governance (ESG) focused on Bitcoin mining and digitalinfrastructure, given its large-scale excesscapacity.
Expansion
While other companies were struggling to stayafloat, Mawson may have recently grabbed the industry’s attentionwhen it announced its growth and expansion strategies on Oct. 18.
The company revealedthat it was relocating its application-specific integrated circuit(ASIC) servers from Georgia to Pennsylvania while continuing theexpansion and development of Pennsylvania facilities — Midland, 100megawatts (MW) and Sharon, 120 MW.
Mawson also said it will secure an additionallarge-scale site for long-term digital infrastructure capacity,explore opportunities to expand its digital mining business anddevelop strategic partnerships and relationships with customers andcommunities.
InJune, the company became a 33% shareholder in Tasmania Data Infrastructure Pty Ltd. (TDI). TDIdeveloped a large-scale, 100% renewable energy Bitcoin mining facilityat the Que River Mine site in Tasmania, Australia, with up to 35megawatts of energy infrastructure available for Bitcoin mining.
“The group’sresidual infrastructure portfolio of 350 MW is capable ofaccommodating up to 12 EH.2, which ensures Mawson continues to havesubstantial expansion capacity for 2023. Our focus on facilities withclose geographic proximity allows us to ensure maximum operationalefficiencies moving forward,” CEO James Manning said in a pressrelease.
Mawson Infrastructure Group (NASDAQ: MIGI) is adigital infrastructure provider, with multiple operations throughoutthe USA and Australia. Mawson’s vertically integrated model is basedon a long-term strategy to promote the global transition to the newdigital economy. Mawson matches sustainable energy infrastructure withnext-generation Mobile Data Center (MDC) solutions, enabling low-costBitcoin production and on-demand deployment of infrastructure assets.With a strong focus on shareholder returns and an aligned board andmanagement, Mawson Infrastructure Group is emerging as a global leaderin ESG focused Bitcoin mining and digitalinfrastructure.
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