Crypto miners planning to go public in the near future are likely to have a difficult few months due to the recent drop in the price of bitcoin and the broader crypto market.
The drop in cryptocurrency prices could have an impact on companies like Core Scientific. In which is planning to go public through a merger with special purpose acquisition company (SPAC) Power & Digital Infrastructure Acquisition Corp., and bitcoin miner Rhodium Enterprise. It is planning an almost $2 billion IPO.
Bitcoin Values Plummeted
Bitcoin values have dropped more than 30% since reaching an all-time high in November. The number of investors and miners coming public has slowed as a result.
Luxor Mining’s co-founder and Chief Operating Officer Ethan Vera remarked, “There are a number of SPACs and IPOs that will look to close in the first half of 2022, such as Core Scientific, PrimeBlock, Rhodium, and Griid.” He stated that these potential public firms confront not only a drop in cryptocurrency prices but also an increasingly congested market.
Stronghold Digital has lost more than half of its value since coming public on the Nasdaq in October. Meanwhile, Iris Energy has lost more than half of its value since going public in November.
According to TradingView data, the shares of Gwyneth Paltrow-backed bitcoin miner TeraWulf. This was a SPAC play, dropped on their trading debut in December and have moved sideways since then.
Investors will be looking at miners’ valuations and growth strategies as bitcoin’s price has fallen more than 30%. This was since its all-time high in November. Moreover, competition is anticipated to increase as the network’s hashrate increases this year. Companies that can stand out in an increasingly competitive market will be the eventual winners.
“These [new] companies will need to discover ways to differentiate their businesses from the existing operators. This is in order to maintain their intended valuation when trading,” Vera said. He also mentioned that these firms’ production numbers for January and February will be a good sign of where they would likely start trading. If ever they go public.
According to Eric F. Risley, for investors to pay out for a company, they will need to see a longer-term strategy from the company. Eric is the managing partner of crypto mergers and acquisitions firm Architect Partners. Crypto miners that can operate efficiently, according to Risley, are more likely to flourish in the face of volatile crypto markets.
“We believe the mining haves and have nots (efficiency of operations) will emerge over the next 24 months. It is believed that the haves be benefiting from higher valuations, strategic flexibility, and growth opportunities,” he went on to say.
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