Core Scientific Files Bankruptcy as Crypto Winter Lingers

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(Bloomberg) – Core Scientific Inc., one of the biggest bitcoin miners, has become the latest crypto company to file for bankruptcy as the industry reckon with falling digital asset prices.

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The Austin, Texas-based company listed $1.4 billion in assets versus $1.33 billion in liabilities in its Chapter 11 petition, which was filed in the Southern District of Texas. Shares of the company, already down 98% this year to trade at a fraction of a dollar, were down another 40% on Wednesday morning.

Chapter 11 bankruptcy allows a business to continue operating while it develops a plan to repay creditors. Core Scientific said in a statement that it intends to enter into a restructuring agreement with a group of convertible bondholders and continue to operate its mining and hosting businesses.

The company contributes around 10% of the computing power to secure the entire Bitcoin network. It had 243,000 servers for Bitcoin mining and 143,000 for self-mining. It has provided hosting services to the biggest miners in the industry.

In court filings, the company blamed its bankruptcy on falling bitcoin prices, soaring energy costs and the July bankruptcy of Celsius, one of its biggest hosting customers.

The company also over-committed on construction costs to expand its mining operations and owed about $275 million on equipment financing debts that it failed to pay significant amounts before the filing.

Core Scientific is one of a handful of Bitcoin mining companies that went public in 2021 through special-purpose acquisition companies before the crypto price crash. However, the crypto winter and rising energy costs have taken their toll on the industry, and many big miners are now facing liquidity shortages.

The story continues

A slew of crypto companies have filed for bankruptcy protection this year as falling token prices continue to weigh on the industry. Compute North Holdings Inc., a data service provider for miners and blockchain companies, filed for bankruptcy in September, while Voyager Digital Ltd. sought court protection in July. Exchange Sam Bankman-Frieds FTX filed for bankruptcy in November under a cloud of alleged mismanagement, a move that forced lender BlockFi Inc. to follow suit soon after.

Among bitcoin miners, Greenidge Generation Holdings Inc., once one of the largest public bitcoin miners in the United States, warned on Tuesday that it could seek bankruptcy protection while starting talks to restructure the company. debt with lender New York Digital Investment Group.

(Updates with additional details throughout.)

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