Bitcoin Miner Core Scientific Says It May Seek Bankruptcy
Core Scientific Inc., one of the world's largest miners of Bitcoin, warned that it may run out of cash by the end of the year and could seek relief through bankruptcy protection.
Operating performance and liquidity have been severely impacted by the prolonged drop in the price of Bitcoin, a rise in electricity costs, increased competition and litigation with bankrupt Celsius Networks LLC, the Austin, Texas-based company said in a US Securities and Exchange Commission filing on Thursday. Shares of Core Scientific dropped 78% on Thursday, its worst trading day since going public earlier this year through a merger.
Bitcoin mining companies such as Core Scientific had recently been increasingly opting to sell equity, resorting to one of their least attractive options to raise money as profits dry up and higher interest rates makes borrowing more expensive. The company entered into a $100 million common stock purchase agreement with B. Riley Principal Capital II in July. Bitcoin has slumped almost 70% since reaching a record high in November 2021.
“We could see similar filings within the sector,” said Brian Dobson, an analyst at Chardan Capital, who had a ‘buy' rating on the shares. “This is going to weigh on all of the publicly traded crypto miners.”
Should Core Scientific file for bankruptcy, it would likely be the first large publicly traded Bitcoin miner to do so, Dobson said.
A slew of bankruptcies has 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 in
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