Largest Miner Goes Bankrupt?!

Largest Miner Goes Bankrupt?!

Everyone wants to know when the Bitcoin bottom is. Well, in this video, I’m going to share with you one of the things that typically happens at the very end of the Bitcoin bear market and at the bottoms of bear markets to potentially give you a better idea of when we will see a bottom. So first and foremost, some crazy things have happened recently and that is the largest Bitcoin miner, Core Scientific, just filed for bankruptcy the other day after losing almost $650 million in just three months. This is the largest Bitcoin miner in the world which just declared bankruptcy, and they cited multiple things because of the Bitcoin price obviously plummeting, high energy costs, and when there were actually a lot more miners coming on the network over the last year, which increased the difficulty as well.

So when you have the income paid in BTC going down, you’ve got the price of Bitcoin going down, you’ve got the energy prices going up, and then they have a bunch of debt and, you know, lenders like Celsius weren’t paying them back. It creates a very, very difficult environment for them. Also, we saw another huge data center called Compute North that operated in a lot of different areas but one of their core operations was in Texas. They work with companies like Compass Mining and other large miners and they are essentially the operator and data center behind an energy provider behind the actual facilities. They just actually declared bankruptcy as well, which has halted a lot of operations for all these large-scale Bitcoin miners because now their operator is no longer in business, and they’re having to switch operators and go through the entire bankruptcy filing process and all of that nonsense. So why am I bringing all this up? The reason is because if we look at previous cycles, you can see that there’s something called the hash ribbons which we’ve talked about a few times on this channel, but you’ll see that this indicator shows a buying signal when two things happen.

Number one, we have a decrease in difficulty. So you see this red right here? You see a decrease in difficulty, and then you see it tick back up, which means that Bitcoin miners start to unplug their miners. People start to give up on mining because, most of the time it’s because the economic benefit is not outweighing the cost of it. So you’ll see a lot of people that run these mining businesses that are over-leveraged, their energy costs are too high, they just aren’t, you know, prudent business owners. They typically will start to unplug all their miners once you see a big capitulation event, and then once this ticks back up, it prints a Buy Signal.

And if we go back and look at the very bottoms of bear markets, like in 2015, we actually saw this flash quite a few times. This was the first big one on the big capitulation event, and then there were quite a few buying signals down here, which wasn’t quite the bottom, it’s right after the bottom. But all these in a conglomerate really at the form of this base at the bottom in 2015. And this is just a lot of confusion right here. People, you know, the miner is turning on and off and on and off because they’re trying to figure out, hey, is this big Bitcoin thing even going to be a thing, to move forward after it has a massive, you know, 87% correction.

Then in 2018, same thing, right, but less of a Buy Signal. We had a 2017 and 2018 was pretty streamlined. We had an up rally the whole time, down rally, and then a big capitulation event. We see the Buy Signal because miners came off the network once it actually sold off from 6K to 3K. Then they came right back on once we formed that bottoming process in 2018, and then you saw, you see some, typically scattered throughout. We’ve got the covid crash, we’ve got a lot of confusing things going on during this time. And then you’ll see what happened right before this massive rally. We had, you know, over in China, they banned Bitcoin mining, and that’s what this really big move was, because all the China miners had to go somewhere else. And now we had the first Buy Signal being printed here.

And now we’re having all these other mining companies like I just mentioned going bankrupt, so we’re starting to once again see the hash rate and difficulty come down. And then once this actually corrects and comes back up, we’re gonna print another Buy Signal, which could give us a much higher likelihood that we are at the bottom. This is what you want to see. It’s obviously not great to see companies go bankrupt, really ever, but typically this is what you want to see at the last leg of the bear market, is miners going bankrupt or at least unplugging their miners so the difficulty comes down. It’s just a natural, weeding out of the players that over-leverage and don’t have an efficient business model. It just happens in business cycles, and this typically happens at the very end of the one-year bear market that we’ve seen with a previous Bitcoin cycle, a three-year bull market, one year of a bear market.

I’ll also show you just some other statistics. The hash rate, you know, over long periods of time, it can, it’s been consistently going up because there’s more and more conviction in Bitcoin and Bitcoin’s been, you know, it’s up millions of percent, over the last 10 years

But you will see these big corrections in the hash rate, and we’re starting to get a nice correction right now. If we were to look at some of the miner balances, you’ll see that the miner balances typically like to sell when the price rises. You’ll see in 2017, they sold into this price going parabolic, which is smart, right? They’re realizing profit from mining for three years before that, right? So they’re trying to realize profit and then hold some cash and expand their operations. Some of them will just take loans against them, but usually a lot of the miners will sell against price appreciation.

But the unfortunate part is, yes, they did that this year, and they sold somewhat early a little bit, and you see they sold really heavily right when when Bitcoin came up to right around like 40,000 and then it had a pretty big dip, and they increased their balances because they kept mining, mining, mining. Once China said, hey, no more Bitcoin mining, but now unfortunately at the very bottom of the bear market, they are having to sell their Bitcoin because they’re being forced to sell because they need liquidity to try to make it through this tough time, and that is exactly what is happening right now. It’s a natural weeding out process of, you know, a typical business cycle, and in crypto, it’s been four year cycles, three years of bull market, one year of a bear market. We’re into the 12th and 13th month of the spare market, and we’re starting to see those capitulation events.

So the question is, when are we going to get this next buy signal? The more buy signals you have in a shorter amount of time, the more conviction that you have that this indicator is going to, you know, show that Bitcoin’s price is likely to head up. Obviously, no one indicator will ever show you exactly what the price is going to do, but it does help. The closer you have these buy signals, the more often you have them, especially at the end of the bear markets, that can give you further confirmation that potentially there’s a bear market at the end of the bear market, and the bull market is starting.

And if you go back and actually plot, I’ve talked about this in previous videos, but this hash ribbons indicator is actually very accurate. If you were to look, it’s like 80 percent of the time it’s pretty accurate where you see at least a 50% price appreciation in the price of Bitcoin over the next few months after it shows these buy signals. So go ahead and do some research on that, or go look at the videos that I posted about the hash ribbons indicator back in July, I believe I posted that.

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Jeff Sekinger

Jeff Sekinger Founder & CEO, 0 Percent Who is Jeff Sekinger? Visionary Trailblazer Sekinger has been in the financial industry for over a decade. Starting

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