A series of Bitcoin mining units inside a container at the Cleanspark facility in College Park, Georgia, USA, Friday, April 22, 2022.
Elijah Nouvellage | Bloomberg | Bloomberg | Getty Images
core scientificIt is one of the largest listed cryptocurrency mining companies in the United States. Statement filed with the Securities and Exchange CommissionThe company also said it would not make payments on debt due in late October and early November.
Core’s stock fell 77% on Thursday after filing.
ever since Listing on NASDAQ Through a Special Purpose Acquisition Company (SPAC), Core’s market cap dropped to $90 million and was valued at $4.3 billion in July 2021 when the company went public. The stock is down more than 97% this year. Core said holders of the company’s common stock could suffer a “complete loss of investment” in the event of bankruptcy.
Core scientific mining for proof-of-work cryptocurrencies such as BitcoinThis process involves powering data centers across the country, packed with highly specialized computers that process mathematical equations to validate transactions and simultaneously create new tokens. increase. This process requires expensive equipment, some technical know-how, and large amounts of electrical power.
Core, which primarily mints Bitcoin, saw its token price drop from a record high above $69,000 in November 2021 to around $20,500. This 70% loss in value, combined with increased competition among miners, combined with higher energy prices, compressed its value. Profit rate.
Crypto miners say their operational performance and liquidity have been severely impacted by the “long-term decline in bitcoin prices, rising electricity prices,” and “increasing hash rates of the global bitcoin network.” said. Describes the computational power of every miner in the Bitcoin network.
The filing also blamed a “lawsuit against Celsius Networks and its affiliates” for Core’s financial difficulties. I was earning about 19% a year until I applied for.
apart from Almost all Bitcoin sold in June, the company’s cash fell to $26.6 million. Core self-mines bitcoin to replenish its own coffers (Bitcoin worth $770,000 on Wednesday), the company still warns that it could be completely gone by the end of the year, if not by then.
The Austin, Texas-based mining company, which operates in North Dakota, North Carolina, Georgia and Kentucky, said it may “seek alternatives to equity or debt financing.” . The company is also considering selling assets as well as delaying major capital expenditures, including construction projects.
As for creditors, Core said in its filing that it is free to sue the company for nonpayment and take action on its collateral. “We choose to accelerate the principal amount of such debt.”
Analysts believe Chapter 11 bankruptcy is a real possibility.
Analysts at Compass Point said, “We believe that due to the significant drop in mining rig prices in 2022, it is very likely that creditors holding this debt will decide to restructure instead of owning the collateral.” “Still, we do not know how the talks with CORZ creditors are progressing, but CORZ will apply for Chapter 11 protection, especially if BTC price drops further from current levels. I think we have to take seriously the scenarios we have to do.”
Core, one of the largest providers of blockchain infrastructure and hosting and one of the largest digital asset miners in North America, isn’t the only one struggling. Compute North, which provides hosting services and infrastructure for cryptocurrency mining, filed for Chapter 11 bankruptcy in September, and at least one other miner, Marathon Digital Holdings, is a bankrupt mining company. reported an exposure of $80 million to