Bitcoin continues trading more than 70% below its latest all-time high, only making bear market conditions progressively worse for Bitcoin mining companies.
Some miners are selling thousands of machines to strengthen their balance sheets with more cash. A couple of companies are selling their Bitcoin reserves, liquidating more Bitcoin than they actually mine each month. Others are engaged in lawsuits. Some Bitcoin public mining teams are facing delisting.
That last aspect of the current market is perhaps the most notable, given the novel nature of publicly listed mining firms.
Prices for shares of publicly traded mining companies also remain low or continue dropping. Guidelines that determine whether a company can continue to be listed on US stock markets are now causing some mining companies to face delisting, primarily because of their low share prices. And without a significant rebound in Bitcoin’s price (along with their own stock prices), delisting seems very likely.
US Stock Market Delisting Guidelines
Of the mining companies facing potential delisting, almost all of them are in this situation because of failure to comply with an exchange’s price criteria. Listing standards typically include price criteria that set a minimum dollar-denominated price that shares of a company must not trade below for a consecutive 30 trading-day period.
The latest example of this involves Digithost, a mining company that currently trades on the Nasdaq. As reported by The Block on Oct. 16, the company received notice of possible delisting and has 180 days for its share price to increase, otherwise it risks delisting.
Digihost is certainly not the first company to face delisting in the current bear market, however.
- Bit Mining, a mining company that trades on the New York Stock Exchange (NYSE), also received a letter in late July noting its failure to comply with the price criteria for listing standards due to trading below the $1 mark.
- Mawson, a public mining company that trades on the Nasdaq, received price-related notice of potential delisting in late August.
Not all potential delistings for troubled mining companies are price related. In May, Bloomberg reported that Canaan, a relatively high-profile mining hardware manufacturer, faced a possible delisting after being flagged by the U.S. Securities and Exchange Commission (SEC) for using an auditor whose work could not be inspected by U.S. audit regulators.
One of the most iconic mining company delistings – although it didn’t happen in the current bear market – involved the Long Blockchain Corp., which made dozens of headlines during the 2017 bull market for its pivot from being an iced tea beverage company to a mining company. In early 2018, the company planned to buy over $4 million worth of Bitmain mining machines. The SEC required the Nasdaq to delist Long Blockchain shares in February 2021.
A Bit Of Good News
Despite several mining companies facing delisting, the public mining market is not all bad news. Rhodium, for example, announced its plans to go public despite being in the throes of a bear market. Valued at $1.7 billion as of January 2022, the Texas-based mining company said it plans to go public via a reverse merger after delaying plans to go public announced last year.
And even with the ongoing strains of the bear market, Bitcoin mining companies are still making headlines for mergers and acquisitions. They are also the focus of a growing number of investors interested in lending to or buying troubled teams. For example, CleanSpark, which trades on the Nasdaq, acquired a 36 megawatt (MW) active mining site in Georgia. And Bitmain founder Jihan Wu is raising $200 million to target distressed mining investments.
Bear Market Bitcoin Mining
That a few public miners are facing potential delisting is not a big surprise given the hardness of the current market and how closely correlated mining stocks trade to the price of Bitcoin. It’s also certainly no reason to panic. Even if things get worse for public miners, all their machines will almost certainly be acquired by other companies and eventually be turned back on to process transactions for the network. Winners are built in a bear market – and not everyone is a winner.