Categories: Tech News

Bitcoin Miner Core Scientific Says It May File For Bankruptcy

Core Scientific Inc., one of the world’s largest Bitcoin miners, warned it could run out of cash.

Core Scientific Inc., one of the world’s largest Bitcoin miners, warned it could run out of cash by the end of the year and may seek help through bankruptcy protection.

Operating performance and liquidity have been severely impacted by the prolonged decline in the price of Bitcoin, rising electricity costs, increased competition and litigation with bankrupt Celsius Networks LLC, said the Austin, Texas-based company in a filing with the U.S. Securities and Exchange Commission. Thursday. Shares of Core Scientific fell 78% on Thursday, its worst trading day since it went public earlier this year in a merger.

Bitcoin mining companies such as Core Scientific had increasingly opted to sell shares, turning to one of their least attractive options for raising money as profits dry up and higher interest rates make borrowing more expensive The company signed a $100 million common stock purchase agreement with B. Riley Principal Capital II in July. Bitcoin has fallen nearly 70% since hitting an all-time high in November 2021.

“We could see similar presentations across the sector,” said Chardan Capital analyst Brian Dobson, who had a ‘buy’ rating on the stock. “This will affect all publicly traded cryptominers.”

If Core Scientific files for bankruptcy, it would likely be the first major publicly traded Bitcoin miner to do so, Dobson said.

A slew of bankruptcies have already hit the digital asset space. Compute North Holdings Inc., a provider of data services for miners and blockchain companies, filed for bankruptcy in September. This summer, crypto broker Voyager Digital Ltd. filed for Chapter 11 bankruptcy protection.

“It’s no secret that the space has been struggling overall with low Bitcoin prices,” said Chase White, an analyst at Compass Point Research & Trading who also has a ‘buy’ rating on Core Scientific shares. “They are running out of options here with their ability to raise additional liquidity.”

Core Scientific said it will default on payments in late October and early November on various equipment and other financing, including two bridge promissory notes. The company is exploring alternatives, including hiring strategic advisors, raising additional capital or restructuring its existing capital structure.

Core Scientific had 24 Bitcoins and approximately $26.6 million in cash as of Thursday. That compares with 1,051 Bitcoins and about $29.5 million in cash in September, the company said in the filing.

Shares, which traded as high as $14.32 late last year, closed at 22 cents. they have fallen 98% since the beginning of the year.

Riot Blockchain Inc. fell 3% to $6.84, while Marathon Digital Holdings Inc. fell 1% to $13.65. The companies are down 69% and 58% this year, respectively.

Other Core Scientific Actions: Weil, Gotshal, and Manges were engaged as legal advisors and PJT Partners as financial advisors. He began discussing with creditors initiatives to improve liquidity. May seek alternative sources of equity or debt financing, delay capital expenditures, or evaluate potential asset sales Potentially may seek relief under applicable bankruptcy or insolvency laws


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