Core Scientific: Bitcoin mining giant files for bankruptcy

Core Scientific, one of the largest publicly traded Bitcoin miners in the United States, has filed for Chapter 11 bankruptcy. The company said it was working on a restructuring agreement with its creditors but that she intended to continue her activities. The reason for the choice lies in the collapse of cryptocurrencies this year, which has made it much less profitable to mine virtual coins, in addition to the increase in prices due to the large amount of energy consumed. In fact, Core Scientific’s market capitalization has fallen to around $78 million since peaking at $3.4 billion in April, according to data from FacSet.

The company still generates positive cash flow, but this cash is not enough to repay the financial debt on the equipment it has leased. The bankruptcy filing “was prompted by a decline in the operational performance and liquidity of the company, which suffered from the prolonged decline in the price of Bitcoin, rising electricity costs and non-compliance by some of its hosting customers of their payment obligations,” the company told me. . .

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Core Scientific is a NASDAQ-listed cryptominer that operates five Bitcoin mining facilities in the United States, namely in Texas, North Dakota, North Carolina, Georgia, and Kentucky. It went public earlier this year after a deal with a BlackRock-backed SPAC, but its shares have fallen 98%, especially after crypto lender Celsius Networks went bankrupt this summer. Core Scientific was tied to Celsius through a number of hosting services provided to the lender. Of course, Bitcoin’s backlash has helped as it has lost more than three-quarters of its value since its November 2021 peak of $68,990.

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Core currently has debts of up to $10 billion, with 5,000 creditors demanding money from the company, according to Texas court documents that filed for bankruptcy. The top 30 unsecured creditors owe about $73 million, including unpaid taxes and energy providers. Of these, the main creditor is the B Riley Financial Group, to which Core owes approximately $42 million.

According to court documents, there is a letter written last week by President Bryant Riley, which states that Core Scientific borrowed hundreds of millions of dollars to build mining facilities and expand when the price of Bitcoin was higher today. today and the theoretical salary. significantly faster. Prior to this letter, Core’s senior vice president Michael Bros. said the company disagreed with what Riley had reported.

However, in a regulatory filing in October this year, the miner said common stock holders could face a total loss of their investment if the cryptocurrency industry fails to recover from the debacle. Core also revealed it would not make debt payments between late October and early November, saying creditors were “free to sue the company.”