Bitcoin Mining Giant Core Scientific May File for Bankruptcy Soon

Key Takeaways:

  • Core Scientific, one of the largest bitcoin miners, may run out of cash by the end of 2022, prompting it to declare bankruptcy.
  • Following the news, the shares took a significant hit.

One of the biggest Bitcoin miners in the community, Core Scientific, has raised a warning sign that it might run out of funds by the end of the year and file for bankruptcy.

The company said in a statement distributed to shareholders  that it was looking into a range of options and that it would not be paying any of its outstanding debt that was due in the coming days. 

With regard to “a number of its equipment and other financings, including its two bridge promissory notes,” Core Scientific stated that it will delay making payments in early November and into October.

“With the significant decline in mining rig prices in 2022, we believe there’s a significant chance the creditors holding this debt will decide to restructure rather than take possession of the collateral,” Compass Point wrote in a note. 

“However, without knowing how discussions with CORZ’s creditors are progressing, we believe a scenario in which CORZ must file for Chapter 11 protection should be taken seriously, especially if BTC prices fall further from current levels.”

The company claimed that both rising electricity prices and declining Bitcoin prices had negatively impacted its operating efficiency and liquidity. The currently underway legal dispute with Celsius has further hampered the firm’s capacity to mine bitcoins due to the increase in hash rate.

In a court document filed last week, Core Scientific claimed that Celsius’ failure to make payments had impacted its financial situation and that it was still losing about $53,000 every day to cover higher electricity rates that Celsius refused to pay.

The business has actively looked into alternatives and hired a number of experts to assist with its problems. However, there is a possibility it will run out of money by the end of the year and file for bankruptcy.

The miner currently holds 24 BTC and about $26.6 million in cash. In contrast, it had $29.5 million and 1,051 BTC last month. As of this writing, the shares are trading around $0.25, a significant 75% drop from where they were 24 hours ago.

A company that runs data centres for Bitcoin (BTC) mining, Compute North, recently filed for Chapter 11 bankruptcy. The delay in the operation of Compute North’s 280 MW mining facility in Texas, primarily due to approval issues, was one of the factors that led to the company’s bankruptcy filing.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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