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Thursday, December 1, 2022

Top Bitcoin Miner ‘Core Scientific’ In Dire Straits Now As They Are Headed For Bankruptcy

Core Scientific one of the world’s top Bitcoin miners has warned that it may run out of cash before the end of the year and may file for bankruptcy protection.

Core Scientific Has Cited A Number Of Reasons For Their Downslide

The prolonged drop in the price of Bitcoin, an increase in electricity costs, increased competition, and litigation with bankrupt Celsius Networks LLC have all had a significant impact on Core Scientific’s operating performance and liquidity, the Austin, Texas-based company said in a US Securities and Exchange Commission filing on Thursday. Core Scientific’s stock dropped by more than 40% in pre-market trading.

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Bitcoin mining companies, such as Core Scientific, have recently been progressively electing to sell shares, one of their least appealing choices for raising capital as earnings dry up and borrowing becomes more expensive due to higher interest rates. In July, the company signed a $100 million common stock purchase deal with B. Riley Principal Capital II. Bitcoin has fallen over 70% after hitting a record high in November 2021.

Core Scientific announced that the company will not make payments due in late October and early November on a variety of equipment and other financings, including two bridge promissory notes. The company is considering many options, such as engaging strategic counsel, obtaining new funds, or reorganizing its present financial structure.

Core Scientific has 24 Bitcoins and nearly $26.6 million in cash as of Thursday. In September, the business reported 1,051 Bitcoins and around $29.5 million in cash.

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The shares, which once traded for as much as $14,32, are now down roughly 37 cents. They’ve dropped by more than 90% this year.

Weil, Gotshal & Manges was hired as legal counsel, and PJT Partners was hired as finance counsel.

It is possible to seek relief under applicable bankruptcy or insolvency legislation.

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