Main listed companies Bitcoin (BTC) Mining company Core Scientific has admitted it could run out of money by the end of the year and could go bankrupt.
The company’s liquidity position has taken a big hit this year as the price of Bitcoin plummeted from a peak of around $69,000 late last year to just over $20,000 today.Bitcoin miners are often highly leveraged. and its margins are highly sensitive to the price of Bitcoin.
In addition to falling spot prices, miners are also struggling with rising energy costs this year.This was also noted by the SEC filing From Core Scientific on Thursday, litigation costs related to the bankruptcy proceedings of crypto lender Celsius (cell).
Core Scientific said in its filing that it will not make any payments related to the equipment financing, which is scheduled for October and early November. It added that it would consider “potential strategic alternatives” for its capital structure, which could include hiring strategic advisors and restructuring its current capital structure, he said.
The company has already hired law firm Weil, Gotshal & Manges LLP as legal counsel and PJT Partners LP as financial counsel to help evaluate these strategic options, the filing said.
Core Scientific’s liquidity position is currently under serious pressure, with the company currently holding only 24 BTC and approximately $26.6 million in reserves, according to filings. This compares to 1,051 BTC and about $29.5 million in cash as of the end of last month.
“We expect our existing cash resources to be exhausted by the end of 2022,” it said, adding that “substantial doubts exist about our ability to continue as a going concern for a reasonable period of time.” .
If Core Scientific files for bankruptcy, it will likely become the first listed cryptocurrency miner to file for bankruptcy, says Chardon Capital analyst Brian Dobson. Said Bloomberg in comments. “This is going to weigh heavily on all listed crypto miners,” said an analyst who still has a “buy” rating at Core Scientific.
Core Scientific shares fell sharply on Wall Street on Thursday, down 78.13% to $0.2209 per share. The decline continued in Friday’s pre-market trading, with the stock down 4.5% compared to yesterday’s closing at the time of writing.