Bitdeer Liquidates Entire Bitcoin Treasury – Signal of Industry Crisis?

Bitdeer Liquidates Entire Bitcoin Treasury – Signal of Industry Crisis?

The complete dissolution of Bitcoin holdings by an established mining corporation is more than just an operational decision – it could be a warning signal for the entire mining industry. While other companies are building up their treasuries, Bitdeer is going in the opposite direction, potentially revealing the precarious situation of many miners in times of historically low profitability.

The simultaneous raising of $300 million through convertible bonds underscores the urgency of capital acquisition and raises questions about the financial stability of the company founded by Bitmain co-founder Jihan Wu.

The Facts

Bitdeer has liquidated its entire Bitcoin treasury and now holds zero BTC in its own reserves, according to the company's latest weekly report ^[1][2]. Specifically, the mining company not only sold the 189.8 BTC produced during the reporting week, but additionally liquidated another 943.1 BTC from its existing treasury reserve ^[1]. Just one week earlier, on February 13, Bitdeer had a treasury of 943.1 BTC ^[1].

This complete liquidation represents a clear departure from standard practice in the mining industry. Typically, mining companies only sell a portion of their mined Bitcoin to cover operational costs such as electricity, hosting, and hardware, while simultaneously building strategic Bitcoin reserves to benefit from potential price increases ^[1][2]. A complete dissolution of treasury holdings, however, is unusual and indicates significant capital needs ^[2].

Parallel to the treasury liquidation, Bitdeer announced on Thursday the raising of $300 million USD through a convertible senior note, with an option to increase by an additional $45 million ^[1][2]. The bonds, which run until 2032, can later be converted into shares, cash, or a combination of both ^[1]. According to the company, the funds are to be used for the expansion of data centers, growth in the AI cloud sector, development of mining hardware, and general corporate purposes ^[1][2].

The announcement led to a significant decline in Bitdeer's stock price ^[1]. The company, founded by Jihan Wu, the former Bitmain co-founder, has recently changed its strategy and is increasingly expanding into self-mining as demand for its mining hardware declines ^[1]. Instead of selling its own mining rigs to customers, Bitdeer is increasingly deploying them itself to mine Bitcoin ^[1].

The background to this development is the tense economic situation of the entire mining industry. The hashprice – an indicator of mining profitability – has fallen to a historically low level ^[2]. This means declining revenues for many operators while fixed costs remain high ^[2]. The industry is thus in a structural crisis that was further exacerbated by the 2024 halving and the resulting lower block rewards.

Analysis & Context

The complete liquidation of the Bitcoin treasury by Bitdeer is a remarkable contrast to the current trend among other publicly traded companies. While MicroStrategy, Marathon Digital (MARA), and other firms are continuously expanding their Bitcoin holdings and viewing Bitcoin as a strategic treasury reserve, Bitdeer is going in the opposite direction. This discrepancy indicates significant operational challenges.

The combination of complete treasury liquidation and simultaneous debt capital raising of $300 million allows for several interpretations: Either Bitdeer urgently needs liquidity to meet ongoing obligations, or the company is pursuing a strategic reorientation toward AI and data centers – a trend that several mining companies are already following. MARA Holdings recently acquired a majority stake in French computing infrastructure company Exaion, thereby also positioning itself in the AI and cloud sector ^[1]. Companies like HIVE, Hut 8, TeraWulf, and IREN are also increasingly using their infrastructure for AI applications instead of exclusively for Bitcoin mining ^[1].

Historically, periods of low mining profitability have always been consolidation phases in which inefficient operators were forced out of the market. This led in the medium term to a reduction in hashrate, lower mining difficulty, and improved conditions for the remaining miners. However, the current situation differs in that the hashrate remains at a high level despite low profitability – a sign of intense competition and possibly of companies continuing to operate despite losses.

For Bitcoin investors, the increasing selling pressure from miners means potentially additional supply in the market in the short term. However, the sales volume of even larger mining companies is manageable relative to Bitcoin's daily trading volume. More important is the signaling effect: If established miners must liquidate their holdings, this could indicate an impending wave of consolidation that could strengthen the network's health in the medium to long term.

Conclusion

• The complete treasury liquidation by Bitdeer is a clear warning signal of financial strain in the mining industry and stands in stark contrast to the treasury strategy of other publicly traded companies

• The combination of Bitcoin sales and $300 million debt capital raising indicates either acute liquidity needs or a strategic reorientation toward AI and data centers – a trend that several miners are already following

• The historically low hashprice is forcing mining companies to decide: Either capital raising and diversification, or risk of insolvency with persistently low profitability

• For the Bitcoin price, the additional selling pressure from miners is likely to be marginal in the short term; more important is the medium-term consolidation of the industry, which could lead to a healthier market structure

• The development shows once again that Bitcoin mining is increasingly becoming a business with high capital requirements, in which only well-capitalized and efficient operators can survive in the long term