Core Scientific is filing for Chapter 11 bankruptcy protection in Texas on Wednesday, December 21. It is one of the largest publicly listed crypto mining companies in the U.S. Core Scientific has decided to file for bankruptcy due to falling crypto prices and rising energy prices that deteriorated its finances.
Despite the $72 million in financing from its lender B. Riley last week to avoid bankruptcy, the crypto miner was unable to work efficiently and will work on restructuring, reported CNBC. Core Scientific plans to keep mining until it restructures its balance sheet.
Core Scientific’s market cap dropped to $78 million on Tuesday, down from a $4.3 billion valuation in July 2021 when it went public. The CORZ stock price has fallen more than 98% in the last year. On Tuesday, the stock price ended at $0.21, up 3.07%.
According to a person familiar with the company’s situation, the company is still generating positive cash flow. However, cash is insufficient to repay the financing debt owed on mining equipment it was leasing. Core Scientific will not liquidate and operate normally until reaching a deal with senior security noteholders, which hold the majority of the company’s debt.
Crypto influencers took to Twitter to report Core Scientific’s bankruptcy filing. Many crypto miners are facing financial constraints amid the bear market.
Crypto researcher Dylan Leclair reported that the firm owns approximately 5% of the global hash rate. He also shared the situation of listed crypto miners with many having stock prices down over 90% in 2022.
Crypto investor and board member at Iris Energy Mike Alfred said Core Scientific had told him that the company would have 13 EH by July of this year when he first looked at the company in the summer of 2021.
Many people showed concerns over the future of bitcoin mining as several crypto miners such as Argo Blockchain and Iris Energy are facing bankruptcy risks.
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