Crypto Firms Take Huge Losses in 2022; Mining Firms Hit Hardest

• Bitcoin’s performance was poor this year, but most public crypto companies did worse, with drawdowns of up to 99%.
• Mining firms were particularly hard hit, recording drawdowns of 90% or more.
• Core Scientific, one of the biggest Bitcoin mining companies, had to file for Chapter 11 bankruptcy due to its large losses.

The crypto sector has had a challenging year in 2022, with the majority of public companies in the space failing to keep up with Bitcoin’s performance. According to the year-end report from Arcane Research, the most popular cryptocurrency has seen negative returns of around 65%, but the drawdowns experienced by the large public crypto firms have been even worse.

The market cap of Coinbase, one of the most well-known crypto exchanges, has gone down by 87%, leading to the firm’s valuation being lower than meme coin Dogecoin. However, the worst performer on the list has been Core Scientific, a Bitcoin mining company, which has seen a drawdown of 99%. As a result of its large losses, Core Scientific had to file for Chapter 11 bankruptcy earlier in the month.

Mining firms have generally been hit especially hard this year, with most of them being 90% or more underwater for the period. This is likely due to the high cost and energy consumption associated with Bitcoin mining. With the price of BTC dropping significantly and the difficulty of mining continuing to increase, profits have been significantly reduced. This has led to miners cutting back their operations, resulting in the large drawdowns in their valuations.

Besides the mining firms, other public companies in the digital asset sector have also seen substantial losses this year. Microstrategy, whose stocks are mainly attractive due to their exposure to BTC through the company’s large reserves, has still observed a deeper year-to-date drawdown of about 74%.

Overall, 2022 has been a difficult year for the crypto sector, with most of the big public companies in the space underperforming Bitcoin. Mining firms have been particularly affected, recording drawdowns of 90% or more. This has had a significant impact on the industry, leading to companies such as Core Scientific having to file for bankruptcy.