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100 sats \ 1 reply \ @elvismercury 22 May \ on: The Role of Debt in the Mining Industry - Part I bitcoin_Mining
More and more I'm wondering about the parties in the btc ecosystem that are
a) incredibly rich in btc terms, and
b) astoundingly encumbered by debt
The most notable examples are btc shell (nee "treasury") companies (e.g., MSTR and these other nascent "big pile of bitcoins" instruments) but seems like miners meet that description too.
I'm trying to think through what the collapse of this giant tower of debt could look like, perhaps something like:
- btc price craters due to exogenous shock of some kind
- the growth stalls out, premia over NAV erodes
- debt must be serviced
- company forced to sell largeish number of btc
- price plummets further
- people start panic-selling
- lather, rinse, repeat
I'd like to understand in more detail how this might go, but to do that I'd have to understand more about these debt dynamics. Seems like somebody could produce their life's work on a really solid analysis of this topic.
It seems inevitable to me too, but my debt worldview is anchored in the 2008 financial crisis and I see debt bubbles everywhere. There's such a strong macro/inflation tail wind now that the exogenous shock would have to be huge I imagine - like government confiscation, coinbase failing, our exploitable consensus being exploited, quantum, or some ASI creating inventing a 10000x better bitcoin. Something so big that Saylor and company feel comfortable dismissing them as "yeah, we can't stop catastrophic shit from happening."
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