Core Scientific: BTC mining giant goes bankrupt
The US bitcoin mining giant Core Scientific has filed for bankruptcy. The company’s cash reserves are dwindling. Now the share price is also collapsing. A bankruptcy filing should save the company shortly before.
Mining giant files for bankruptcy
Core Scientific is a company based in Austin, Texas. Operations started in 2017 and have since grown into one of the largest bitcoin miners in the world. In the summer of this year, one was responsible for ten percent of the entire hash rate of the Bitcoin network.
The company operates over 180,000 ASICs. But that could possibly soon be over, as a report by the supervisory authority SEC shows. Because: Core Scientific is insolvent. Only 24 bitcoin and $26.6 million remain in the company’s reserves.
The problem: Core Scientific is in crisis. Almost every political problem in recent months has affected the company. Starting with the bear market , through which one can sell the mined bitcoin for less money. It continues with sharply rising electricity prices.
In addition, the competition is increasing at the same time. With the same computing power, the mining yield also decreases. The company wants to prevent liquidation by filing for bankruptcy. If the competent insolvency court agrees to the application, debt payments could be postponed and more capital would then be available every month.
In July, notorious crypto lender Celsius files for bankruptcy . The company is involved in a variety of deals, including mining deals with Core Scientific. Celsius does not pay the promised electricity costs for the rented ASICs. The miner is left with a loss of 53,000 US dollars every month.
Core Scientific Crash: Stock collapses
The mining company is traded on the NASDAQ under the symbol CORZ. In the last 24 hours, the stock has experienced a drastic crash . The security falls by around 80 percent and is currently at a market value of 22 US dollar cents.
Logically, news about the company’s illiquidity did not have a positive effect on investors. Since the beginning of the year, the operation has eaten up enormous amounts of money.
Further growth forecasts were announced in January, which were repeatedly revised downwards during the ongoing bear market. The sale of several thousand BTC raised hundreds of millions of US dollars, but ultimately could not stop the company’s downward trend.
What happens to Core Scientific now?
It is not yet clear at this point whether Core Scientific can survive the insolvency. It was not until August that ten percent of the employees were laid off. Although founder Darin Feinstein and managing director Mike Levitt say that they want to keep their business alive, it remains questionable whether this wish is still realistic.
Hundreds of millions have not been enough this year to save Core Scientific. The rescue should be possible through restructuring and new capital. It is questionable whether this is only intended to keep one’s head above water until the next bull market.
If the mining operation is simply no longer profitable at the moment, it could mean the end in the long term. Competitor Compute North collapsed in September, leaving $500 million in debt.
On the other hand, analysts at Compass Point believe falling mining rig prices could keep Core Scientific operating. According to their own statements, the last cash reserves will be used up by the end of the year at the latest.