Crypto miner BIT Mining (BTCM) as soon as made most of its self-mining income from Ethereum. After the Merge, it’s more and more counting on Dogecoin and Litecoin for contemporary money.
The miner, based mostly in Ohio and listed on the New York Inventory Change, reported income of $72.9 million for final quarter — a near-20% leap from the earlier interval however down 75% 12 months on 12 months.
BIT Mining’s income comes from three main enterprise areas: mining crypto itself, mining as a part of a pool and internet hosting companies in its datacenters.
The agency’s mining pool income got here in at $60 million final quarter, making up 82% of its whole inflows, whereas self-mining and datacenters every introduced in about $6 million.
As famous by analyst Mike Fay (by way of Looking for Alpha), Ethereum mining contributed greater than three-quarters of BIT’s self-mining income main as much as the Merge final September.
The occasion transitioned Ethereum away from energy-intensive proof of labor to proof of stake, eliminating the necessity for crypto miners as a part of consensus.
BIT Mining’s self-mining income predictably nosedived after the change, dropping from $7.1 million in Q3 2022 to $1.9 million within the following interval.
The agency mined $6.2 million crypto within the first quarter of 2023 — most of it litecoin (LTC) and dogecoin (DOGE) after shutting down sure bitcoin mining rigs.
Dogecoin and Litecoin hashrates skyrocketed to all-time highs instantly across the Merge, though their hashing algorithms differ from Ethereum’s. Crypto miners are capable of direct their rigs at Dogecoin and Litecoin concurrently by what’s referred to as “merge-mining.”
BTCM has drastically underperformed the crypto market, in addition to main miners Riot and Marathon
BIT Mining bought ETH over staking it
Fay discovered one transfer notably confounding: BIT Mining bought one-third of its ETH holdings between quarters, amounting to 1,602 ETH ($3 million at present costs).
Then again, the agency held 62% extra dogecoin quarter on quarter, going from 42.8 million DOGE ($3.1 million) to 69.5 million DOGE ($5 million). Its bitcoin holdings (289 BTC value $7.8 million) remained unchanged.
Meaning BIT Mining’s crypto steadiness sheet was nearly 28% DOGE on the finish of Q1 2023. Its whole property have been $40.2 million with $39 million liabilities, together with lease obligations.
“The corporate’s crypto treasury administration selections are odd from the place I sit,” Fay wrote in his report. “Whereas I’ve made it no secret that I feel property like Dogecoin don’t have a lot of a future, for my part the extra egregious determination is promoting the ETH on the steadiness sheet when the corporate may very well be producing rewards by staking it natively on-chain.”
Fay continued: “It’s obscure why administration would choose as an alternative for holding meme cash relatively than promoting all DOGE manufacturing and staking Ethereum at just about no value. BTCM continues to be an keep away from for me.” Blockworks has reached out to BIT Mining for remark.
Because of rising ETH costs this 12 months, BIT Mining’s ether stash is value virtually the identical
In any case, BIT Mining has reportedly solely managed to generate a constructive internet revenue for one quarter between 2016 and 2022 whereas more and more diluting its shares as of 2021.
BIT Mining, which instructions a $31 million market cap, is up 85% throughout 2023 up to now however down the identical quantity over the previous 12 months.
David Canellis contributed reporting.