Bitcoin miner Core Scientific filing for bankruptcy, will keep mining

Core Scientific’s 104 megawatt Bitcoin Mining Data Center in Marble, North Carolina

Carey McKelvey

core science, one of the largest publicly traded cryptocurrency miners in the United States, is filing for Chapter 11 bankruptcy protection in Texas early Wednesday morning, according to a person familiar with the company’s finances. company. The move comes after a year of plunging crypto prices and soaring energy prices.

The core science of mining proof-of-work cryptocurrencies like bitcoin. The process involves powering data centers across the country, equipped with highly specialized computers that process mathematical equations to validate transactions and simultaneously generate codes. new notification. This process requires expensive equipment, some technical know-how and a lot of electricity.

Core’s market capitalization fell to $78 million at the end of Tuesday’s trading session, down from a $4.3 billion valuation in July 2021 when the company to the community through a special purpose acquisition vehicle, or SPAC. Shares have fallen more than 98% in the last year.

According to a person familiar with the company’s situation, the company is still generating positive cash flow, but that cash isn’t enough to cover debt financing the equipment it has leased. The company will not liquidate, but will continue to operate normally while reaching an agreement with senior security creditors, who hold the majority of the company’s debt, according to the person, who declined to state. name when discussing confidential corporate matters.

The core already exists previously said in a profile in October that holders of its common stock could suffer “the loss of their entire investment,” but that may not be the case if the industry as a whole recovers. The cut deal with Core’s convertible bondholders is structured in such a way that, in fact, if the business climate for bitcoin improves, holders of common stock may not be affected. completely erased. The company also revealed that it won’t make debt payments due in late October and early November – and says creditors have the right to sue the company for nonpayment.

Core, which primarily mines bitcoin, has seen the price of the token drop from an all-time high above $69,000 in November 2021 to around $16,800. that is profit margin.

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The Austin, Texas-based miner, which has operations in North Dakota, North Carolina, Georgia, and Kentucky, said in its October filing that “operating performance and liquidity have been severely impacted due to the impact of the crisis.” prolonged decline in bitcoin price, an increase in the cost of electricity,” as well as “an increase in the hash rate of the global bitcoin network” — a term used to describe the computing power of all tools mining in the bitcoin network.

Celsius crypto lender, which file for bankruptcy protection in July, is a core customer. When Celsius’s debts were written off during the bankruptcy process, it put a strain on Core’s balance sheet, which is another example of the contagion effect across the cryptocurrency sector in the past few years. this year.

Core — one of the largest providers of blockchain infrastructure and storage services, and one of the largest digital asset miners in North America — is not alone in its struggles. me.

Compute North, which provides storage and infrastructure for cryptocurrency mining, filed for Chapter 11 bankruptcy in September, and another mining company, Marathon Digital Holdings, reported $80 million investment in Compute North.

Meanwhile, Greenidge Generation, a vertically integrated cryptocurrency miner, reported second quarter net loss more than 100 million dollars in August and hit “pause” the expansion plan to Texas. And Argo’s shares fell 60% following the announcement on October 31 that a plan to raise $27 million with a “strategic investor” was no longer happening.

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