Core Scientific, Bitcoin Miner May File Bankruptcy Owing To Crypto Slump

The world’s largest bitcoin miner, Core Scientific, shows severe concerns about the financial position and hired restructuring advisors to work out the debts in days. The aim is to avail relief through the bankruptcy option.

The company is engaged in blockchain infrastructure, digital asset self-mining, and premium hosting. Its headquarter has been located in Auston, Texas, United States, since 2017, and it also operates its data centers in North Carolina, Georgia, Texas, North Dakota, and Kentucky.

The statement of Core Scientific provided in the SEC’s report claimed:

Given the uncertainty regarding the Company’s financial condition, substantial doubt remains about the Company’s ability to continue.

Reasons for Bankruptcy Of Core 

According to the company’s statement, several market factors, including the drop in the price of bitcoin, the rise in energy prices, the fierce competition in the sector, the growth in the hash rate of the entire bitcoin network, and the legal dispute with the insolvent Celius Network LLC, have negatively impacted the liquidity and operations.

Eventually, the company delayed construction expenditure, reduced or slowed capital expenditure, raised hosting income, and stopped payments due till late October and early November 2022. It may raise additional capital, restructure the existing capital structure, and exchange its current debt for equity or other obligation. 

The company manages the service professionals, including Gotshal, who works as a legal advisor, England Weil, and PJT Partners for financial advisory. It is also discussing with creditors for improving liquidity. The principal potential benefit is based upon relief provided by bankruptcy or insolvency laws. 

Core Scientific had already entered NASDAQ through the merger of $4.3 billion with Power and Digital Infrastructure Acquisition Corporation to improve liquidity. 

Related Reading | PGI Global Found Guilty Of Running Fraudulent Crypto-Scam

The company held 24 bitcoins on October 26, 2022, with almost $26.6 million in cash value compared to the 1,051 bitcoins with a cash value of $29.5 on September 30, 2022. This year, the company’s shares declined by more than 90%, from $14.32 to only 0.25 cents.

It takes work to predict the future liquidity position of the company. However, it is anticipated that existing resources may deplete by 2022.

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