Bitcoin Miner Core Scientific Filed For Chapter 11 Bankruptcy Protection

Key Points:

• One of the biggest publicly listed cryptocurrency mining businesses in the US, Core Scientific, has announced that it is declaring bankruptcy.
• The firm continues to have a good cash flow and intends to mine while paying off its debts.
• The move is a spread of Celsius, one of Core’s clients.

According to a familiar person with the company’s finances, Core Scientific, one of the biggest publicly traded crypto mining businesses in the U.S., is filing for Chapter 11 bankruptcy protection in Texas early on Wednesday morning. CNBC first reported about this case.

According to a personal acquaintance with the company’s financial condition, who asked to remain unnamed to discuss private company affairs, the company is still producing positive cash flow, but that money is insufficient to pay off the financial obligation associated with the equipment it was leasing.

This source states the company will not go into liquidation but will carry on as usual while negotiating a solution with senior security noteholders, who are responsible for the majority of the company’s debt.

As of the close of trade on Tuesday, Core Scientific’s market capitalization was at. $78 million, down from a $4.3 billion valuation in July 2021 when the company went public via a special purpose acquisition vehicle or SPAC. Over the past year, the stock has decreased by com 98%.

Holders of Core’s common shares may not lose all of their investment, despite what Core had said in a filing in October if the industry as a whole rebounds. Additionally, the company payments that it would not make the debt payments that were due in late October and early November and that it stated that it was free to take the business to court for nonpayment. The action comes after a year of rising energy prices and falling Bitcoin prices.

The price of Bitcoin has fallen from an all-time high of around $69,000 in November 2021 to roughly $16,800. Core Scientific mostly mines Bitcoin. Its profit margins have been reduced as a result of that value decline, increasing rivalry among miners, and rising energy prices. At the time of writing, BTC is trading at $16,633.

Celsius, a cryptocurrency lender, sought bankruptcy protection in July and was a Core Scientific client. Another illustration of the contagion effect affecting the whole crypto industry this year is when Celsius’ debts were financial during its bankruptcy procedures, which put pressure on Core’s sheet.

Not only Core Scientific but miners in the crypto industry are also having problems.

Compute North, a company that offers infrastructure and hosting services for cryptocurrency mining, filed for Chapter 11 bankruptcy in September, while another miner, Marathon Digital Holdings, disclosed an exposure to Compute North of $80 million. Argo Blockchain is also currently struggling during the harsh crypto winter period.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Website: coincu.com

Harold

Coincu News