Crypto billionaire Sam Bankman-Fried hints at acquiring distressed miners

The co-founder of digital asset exchange FTX is considering buying troubled crypto companies to stem potential credit contagion

Sam Bankman-Fried, co-founder of FTX, has acted as a lender of last resort during the recent cryptocurrency meltdown. AFP
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Sam Bankman-Fried, the co-founder of cryptocurrency exchange FTX US who just signed a deal with crypto lending platform BlockFi, said he’s open to exploring acquisitions in the battered crypto-mining industry next.

The move comes at a time when Bitcoin mining companies are facing growing distress.

The cryptocurrency billionaire is considering acquiring troubled crypto companies to stem potential credit contagion amid the prolonged bear market.

“When we think about the mining industry, they do play a little bit of role in the possible contagion spread, to the extent that there are miners that were collateralising borrows with their mining rigs,” Mr Bankman-Fried said on Friday.

“There might come along a really compelling opportunity for us — I definitely don’t want to discount that possibility.”

Mr Bankman-Fried has acted as a lender of last resort during the recent cryptocurrency meltdown, with his trading company, Alameda Research, providing credit lines to Voyager Digital.

He stopped short when it came to Celsius Network, turning down a bailout request by the lender, according to a source.

While cryptocurrency mining wouldn’t fit into FTX’s core strategy, Mr Bankman-Fried has been looking into whether there are “underwater miners” that could have some balance sheet impact on cryptocurrency lending companies, he said.

On Friday, his exchange signed an agreement to inject capital into BlockFi with an option to purchase the cryptocurrency lender for as much as $240 million.

The bear market has made it difficult for cryptocurrency miners to raise capital and pay down debt stemming from their aggressive expansion over the past two years.

As much as $4 billion of loans backed by cryptocurrency mining equipment are coming under distress as some of the most-popular machines’ value has dropped by about 50 per cent since last November, when crypto markets peaked.

As a result, merger-and-acquisition opportunities could arise.

Marathon Digital Holdings chief executive Fred Thiel said in April that his company was open to the possibility of a sale at the right price.

Updated: July 02, 2022, 9:59 AM
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