Main Scientist Files For Bankruptcy As Bitcoin Price Still Weak

Core Scientific, a major publicly traded crypto mining company in the United States, has filed for Chapter 11 bankruptcy protection in Texas.

The development comes on the back of a prolonged crypto winter and weak bitcoin price action, exacerbated by the FTX bankruptcy.

Core Scientific had exposure to Celsius

At press time, Core Scientific’s market capitalization was close to $73.6 million. Its 52-week change is showing a decline of 98%. However, trailing twelve months operating cash flow is positive at $198.94 million, according to Yahoo Finance. Despite having good cash flow, the funds are not sufficient to pay off the financing debt commitments.

Lease arrangements for its mining equipment account for the majority of this debt.

CORZ price action on NASDAQ in USD via TradingView
CORZ price action on NASDAQ in USD via TradingView

It is reported that the company will be saved from liquidation after being declared bankrupt. This means that business as usual will continue while the deal is negotiated with the major creditors. Notably, the firm published a bankruptcy alert in an SEC statement in October.

CORE had issued warnings temporarily pausing loan payments in the last two months. It told its equity shareholders that they risk losing all their investments. This was due to the failure of Celsius and its partners, which Core Scientific cited in its filing as the reason for its financial concerns.

Due to the effects of the crypto market downturn in May, Celsius stopped accepting customer withdrawals and filed for Chapter 11 bankruptcy in July 2022. Since then, the crypto lender has been attempting to woo potential buyers for its retail and mining businesses.

rising costs and falling profits

Since its peak last year, the bitcoin mined by the company has lost about 75% of its value. According to CoinGecko, the top cryptocurrency was hovering in a 24-hour trading range of $16,781 and $17,026 at press time.

Additionally, according to Glassnode, the mining difficulty in December was only 3.5% below its all-time high. This indicates that weak price action and high difficulty continue to weigh down mining profits.

The miner also acknowledged in its October filing that the continuous decline in the price of bitcoin, increase in electricity bills and increase in the hash rate of the entire bitcoin network had a negative impact on its operational performance and liquidity in many. states.

Competitors report decline in revenue

Northern Data, a provider of high-performance computing (HPC) infrastructure and a bitcoin miner, recently revealed that between the end of January and November 2022, it generated 2,614 BTC from bitcoin mining. However, due to the decline in the value of the coin, bitcoin revenue decreased by about 15% month-on-month.

Riot Blockchain, another mining company, revealed a third quarter loss of over $30 million. The company will likely survive the challenging market because of its strong capital position, according to Roth Cash Partners analyst Darren Aftahi, despite posting a net loss of $36.6 million.

Hut 8 Mining Corp., a company that mines digital assets, also disclosed an $18.6 million year-over-year decline in revenue for the third quarter of 2022, down from $31.7 million.

Hut 8 Mining and Riot Blockchain have reportedly been paying more attention to short sellers this year. Riot Blockchain is one of the largest US-listed operators.

Finally, with a net loss of $75.4 million in the most recent quarter, Marathon Digital Holdings Inc. has also seen a decline in the stock. Marathon Digital Holdings disclosed an $80 million investment in Compute North, a mining service provider that declared bankruptcy in September.


BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.

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