BTC Miner Northern Data Forecasts $204m in Revenue Despite Industry Crisis

Thursday, 22/12/2022 | 09:25 GMT by Damian Chmiel

The company's revenue is expected to grow by 1.11% compared to the record in 2021.

The mining industry was hit hard by the drop in Bitcoin prices and rising energy costs.

Northern Data (XETR:NB2), a publicly-listed crypto mining firm based in Germany, forecasts more than $200 million in revenue from its operations in 2022. According to the shareholder letter published yesterday, the company has no financial debts and successfully combats the adverse effects of the prolonged cryptocurrency winter.

Northern Data Forecasting Solid Revenues in Spite of Industry Downturn

The company is expected to generate between $202 million and $206 million in revenue from cryptocurrency mining this year. It represents an average increase of 1.11% compared to fiscal 2021, in which revenue increased tenfold compared to 2020. The current growth, although modest, is highly significant considering the recent sharp slowdown in the mining industry.

"Northern Data is not carrying financial debt and therefore has access to the unique opportunity to consolidate and expand our current position in BTC mining while scaling cloud solutions and colocation services in parallel. We see significant opportunities in the HPC (high-performance computing) markets we are targeting," Aroosh Thillainathan, the Chief Executive Officer of Northern Data, stated.

The company focuses on growth despite tough times for the industry and has ordered 13,000 ASIC miners with corresponding contracts for electrical power in the coming months. At current mining difficulty levels, Northern Data assumes it will be able to mine around 500 BTC per month after the full implementation of the new equipment.

"Because with energy costs of around EUR 0.03/kWh, the production of a Bitcoin for around EUR 10,000, and therefore high profitability at the current BTC price, is still possible," Thillainathan added.

Light in a Very Dark Tunnel for Northern Data, BTC Miners

Not all cryptocurrency miners can boast such optimistic earnings forecasts as the Germany-based, Northern Data. Bitcoin's decline of more than 60% this year and rising energy costs have made BTC mining unprofitable for many miners. The harsh conditions have forced them to distribute their cryptocurrency and cash reserves to fund current operations.

The problem affects not only small mining operations but also large publicly traded miners. Core Scientific, one of the largest mining companies in the US, filed for Chapter 11 bankruptcy protection yesterday, according to the people familiar with the matter. The company's shares fell 98%, and its capitalization has shrunk to $78 million from the $4.3 billion reported in July 2021.

Core Scientific illustrates the very problem that miners are currently facing. Although it generated positive cash flow, the company did not have enough cash to pay off debts related to leasing mining equipment. That is why, Thillainathan, in his shareholder letter, emphasized that the company is now free of any financial obligation.

Publicly-listed digital assets mining firms' results show the harmful effects of the current crypto slump. HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE), Hut 8 Mining Corp. (NASDAQ:HUT), Canaan Inc. (NASDAQ:CAN) and Bitfarms (NASDAQ:BITF), posted significantly lower revenue in the third quarter of 2022.