world’s largest Bitcoin (BTC) Miner Core Scientific has warned that it could face bankruptcy if it fails to improve its financial situation. The alert put its shares down 77% to as low as $0.23.
Bitcoin Mining Company Core Scientific Announces It Will Run Out Of Cash Resources Before The End Of The Year
The mining company said it predicts available cash resources will run out by the end of the year, possibly sooner.
“There are significant doubts about the company’s ability to continue operating for a reasonable period of time,” the statement said on Thursday.
The mining company is exploring a number of strategic alternatives to raise additional capital. Weil signed with Gotshal & Manges LLP as legal advisor and PJT Partners LP as financial advisor.
Core Scientific said that if capital-raising alternatives fail, the firm may have to file for bankruptcy protection.
The Austin-Texas-based company said it would not make any due payments on many of its equipment and other financings in late October and early November 2022.
It was stated that the creditors may decide to sue the company or take action regarding the guarantees due to non-payment.
Compass Point wrote on the subject in a review note:
“With the significant decline in mining equipment prices in 2022, we believe it is significant that creditors holding this debt are likely to decide to restructure rather than seize collateral.
Still, we think a scenario where Core Scientific would have to apply for Chapter 11 protection, without knowing how negotiations are going with its creditors, should be taken seriously, especially if BTC prices drop further from current levels.”
Core Scientific’s woes reflect the depressed state of the BTC mining industry, where firms are squeezed between high electricity costs and a stagnant Bitcoin price. Compute North, one of Core Scientific’s competitors, filed for bankruptcy in September, owed as much as $500 million to at least 200 creditors.
Bitcoin hit an all-time high of almost $70,000 in November last year. World’s largest by market value cryptocurrency unit has since fallen since then, falling below $20,000 in June. It has stubbornly stayed around the $20,000 level since then.
*Not investment advice.
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