THE Core Scientificthe world’s largest publicly traded bitcoin mining company headquartered in the United States, filed for bankruptcy Wednesday morning (21).
According to CNBC, the company continues to have positive cash flow. However, the funds are not sufficient to settle debts for rented equipment.
In October, Core Scientific warned shareholders about a possible depletion of cash reserves and their year-end equivalents. The company cited bitcoin’s price drop, electricity tariff hikes, and the increase hash rate of the network as culprits🇧🇷
The company’s liquidity was also strained by legal fees and the bankruptcy of one of its largest clients, Celsius network🇧🇷
bankruptcy filing
With the bankruptcy filing, Core Scientific joins a list of other cryptocurrency miners that have succumbed to the market crash and rising energy prices.
A month ago, the Bitcoin miner had already hinted at it extreme pain with your surgeries and cash crunch due to market conditions.
At the end of the third quarter of this year, Core Scientific $434.8 million loss🇧🇷 In a November report, the company again expressed doubts about continuing operations.
According to documents obtained by CNBC, Core Scientific’s market cap fell to $78 million in late Tuesday trading, down from a $4.3 billion valuation last July since its Nasdaq listing through a special purpose procurement company (SPAC).
declining stocks
Sources familiar with the company’s finances expect it to strike a deal with senior bondholders, who hold the bulk of the debt.
In its statement in early October, Core Scientific said that holders of common stock could suffer a complete investment loss. However, the Bitcoin miner’s agreement with its convertible bond holders is such that if market conditions for Bitcoin improve, common stock holders may not be completely disadvantaged.
Core Scientific has been mining cryptocurrencies with a proof-of-work algorithm, such as Bitcoin, which requires advanced machines and hardware and uses a lot of electricity to do so.
Last year, Core Scientific’s (NASDAQ: CORZ) stock price plummeted 99% and lost more than $4 billion in valuations.
Core Scientific’s biggest competitors, Marathon and Riot, have lost 88% and 83% of their stock prices, respectively, this year, meaning more bitcoin mining company bankruptcies may be on the horizon.
London-based Argo Blockchain warned its shareholders it was threatened by “insufficient cash” and made no guarantees it would avoid bankruptcy.
In 2022, the bitcoin mining industry entered one of its worst bear markets since the digital property originated in 2009, when a worsening of macroeconomic conditions around the world in early November drove the value of bitcoin to its lowest level in 20 months.
Source: Live Coins
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
