According to CNBC sources, Core Scientific filed for Chapter 11 bankruptcy protection in Texas at dawn on December 21. Core Scientific is known as one of the largest Bitcoin mining companies in the world, alongside Genesis Mining, Bitmain, Bitfury, and HashNet.
Core Scientific focuses mainly on “mining” Bitcoin. This process requires the provision of large amounts of power to data centers across the country and specialized computers to process algorithms and generate new tokens.
Core Scientific's market capitalization fell to $78 million by the end of December 20 trading. Previously, the company was valued at $4.3 billion in July 2021 when it listed shares through SPAC. In the past year, Core Scientific stock has fallen more than 98%.
According to CNBC, the company's cash flow is still positive, but that's not enough to pay off debt for equipment financing the company has leased. Core Scientific will not liquidate the assets but continue to operate normally and attempt to reach an agreement with the creditors.
A company representative said in an October statement that holders of Core Scientific common stock could experience "the loss of their entire investment" but that this may not happen if the money industry electronic recovery.
The company also revealed that it may not be able to make its debt payments due in late October or early November and that creditors have the right to sue the company for not receiving the payments.
In June 2022, the collapse of LUNA/UST made miners - including Core Scientific - reluctant to "discharge" Bitcoin at low prices to cover costs.
At that time, Core Scientific is said to have liquidated up to 167 million USD in Bitcoin. However, this amount is not enough for the company to cover operating costs. Core Scientific has decided to issue an additional $100 million of shares to improve liquidity.
By July 2022, Core Scientific continued to face another challenge. The company's largest customer - Celsius Network - filed for bankruptcy.
As CNBC points out, Core Scientific is not the only crypto mining company affected by recent crypto “catastrophe” events. Compute North - another US-based Bitcoin mining company - filed for bankruptcy in September 2022, with an estimated $500 million in debt.
A few weeks later, Marathon Digital Holdings, another mining company, continued to report losses due to having invested $80 million in the bankrupt company.
Additionally, Greenidge Generation, a vertically integrated cryptocurrency miner, also reported a net loss of over $100 million for the second quarter of 2022, and announced a “pause” of its expansion plans to Texas.
