NYDIG and Galaxy Digital Boost Bitcoin Mining Revenues Amidst Bear Market Consolidation
In Brief
NYDIG and Galaxy Digital boosted their bitcoin mining revenues in Q2 amidst the tumultuous market conditions of 2022.
The publicly available documents revealed how the companies adeptly maneuvered the changing landscape to strengthen their mining infrastructure earnings.
Amidst the tumultuous market conditions of 2022, prominent bitcoin asset managers NYDIG and Galaxy Digital boosted their bitcoin mining revenues in Q2. Public filings reveal that both entities strategically capitalized on the bear market’s consolidation phase to strengthen their mining operations.
The publicly available documents revealed how the companies adeptly maneuvered the changing landscape to strengthen their mining infrastructure earnings.
NYDIG, a significant player in the Bitcoin sphere, has emerged as a formidable mining presence by acquiring secured bitcoin miners from debtors, thereby enhancing its mining capabilities.
In January, New York-based Greenidge transferred ownership of 2.8 EH/s to NYDIG and established a hosting agreement. As a result, NYDIG mined over 900 BTC in the first half of 2023, showcasing substantial mining activity during this period.
Moreover, NYDIG’s hosting arrangement with Greenidge expanded the latter’s operations to include proprietary mining, data center hosting, and power generation. This arrangement led to the substantial generation of BTC through third-party equipment.
The cost of Bitcoin production for NYDIG in the initial two quarters surpassed $18,000, with a custody cost of 7 cents per kWh. Contemporary mining competitors Marathon and Bit Digital also estimated their costs at approximately $18,000 per BTC.
Furthermore, Argo Blockchain, having owed debts to NYDIG due to miner financing loans, chose to sell its flagship Helios site to Galaxy Digital. This strategic decision not only eliminated Argo’s debts to NYDIG but also bolstered Galaxy Digital’s mining capacity.
NYDIG’s partnership with Greenidge served as a significant boost to its mining revenues. In parallel, Galaxy Digital’s acquisition of Argo’s site brought about a transformative shift in its business model, intertwining hosting and proprietary mining operations.
Simultaneously, Greenidge completed a 26-MW expansion at its South Carolina site and plans to sell the site to NYDIG, thereby eliminating the remaining secured debts. This mirrored Galaxy’s move towards a hybrid mining model.
It’s noteworthy that Galaxy Digital underwent a transition from primarily leasing equipment and conducting proprietary mining to adopting a hybrid model that involves both hosting and proprietary mining.
According to sources, this transition was catalyzed by the acquisition of Argo’s Helios site and has significantly impacted the growth of its digital infrastructure segment.
In Galaxy Digital’s Q2 report, mining expenses were disclosed at $5.5 million, indicating a robust gross margin of 65% and a production cost ranging from $9,000 to $10,000. These figures are consistent with Argo’s reported numbers for December 2022.
As bitcoin asset managers continue their evolution, substantial questions about the future emerge, particularly in light of bitcoin’s halving. The situation now prompts the industry to explore innovative paths to ensure sustained growth and profitability for the near future.
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About The Author
Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
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Valeria is a reporter for Metaverse Post. She focuses on fundraises, AI, metaverse, digital fashion, NFTs, and everything web3-related. Valeria has a Master’s degree in Public Communications and is getting her second Major in International Business Management. She dedicates her free time to photography and fashion styling. At the age of 13, Valeria created her first fashion-focused blog, which developed her passion for journalism and style. She is based in northern Italy and often works remotely from different European cities. You can contact her at valerygoncharenko@mpost.io
