- Bitcoin (BTC) Miner, Core Scientific, is filing for Chapter 11 bankruptcy protection in Texas.
- The crypto firm cites low BTC prices, increased electricity prices, and increased hash rate prices as its core issues for bankruptcy.
- Core Scientific affirms that it will continue operation despite its filing for bankruptcy.
Another crypto firm has yet again filed for Chapter 11 bankruptcy protection as there is no end to the bear market, affecting every trader, investor, and crypto company.
Owing to the unstable and fluctuating prices of Bitcoin (BTC), the crypto market is inevitably recording an all-time low income, forcing many involved in cryptocurrencies to file for bankruptcy and lose their faith in the growth and benefits of the crypto industry.
Popular BTC mining company, Core Scientific, is one of many crypto firms to have fallen prey to the low-yield income of the crypto market, as the firm is filing for Chapter 11 bankruptcy protection in Texas.
The US-based crypto firm announced that it is filing for bankruptcy owing to the price instability of cryptocurrencies and the surge in energy prices. The company is no longer able to keep up with the bear market. Although it has clarified that it will continue its operations, the BTC mining firm can no longer produce enough cash flow to pay for its leased mining equipment.
Core Scientific is one of the leading BTC mining firms in the industry, recording a valuation price of $4.3 billion back in July 2021. Since then, the company’s valuation has reduced drastically, reporting its current market valuation is $78 million. The crypto-mining firm has lost nearly 98% of its stock and has accepted its fate by filing for bankruptcy.
According to a person familiar with the company, the mining firm will not liquidate. It will continue to operate as it concludes a deal with senior security noteholders with a large share of the firm’s debt.
Just a few days ago, it seemed that Core Scientific would not be filing for bankruptcy as one of its most prominent patrons, B. Riley Financial, had offered to support the company with $72 million. In an open letter to the crypto mining firm, B. Riley Financial Inc., a financial services platform, had reached out to Core Scientific with a proposal to save the company from filing for bankruptcy.
“Bankruptcy is not the answer and would be a disservice to the company’s investors. B. Riley has proposed to Core Scientific’s Board of Directors that it would provide $72 million in new non-cash pay financing on favorable terms,” the financial services said.
However, all hope has been lost for the once-prosperous crypto mining firm. On October 26, the publicly traded company filed with the United States Securities and Exchange Commission that it could file for bankruptcy, citing the instability of Bitcoin prices and the increased price of the hash rate due to the growing competition in the crypto mining industry.
“The Company’s operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in global bitcoin network hash rate, and the litigation with Celsius Network,” the filing reads.
However, according to B. Riley Financial, most of Core Scientific’s problems leading to its filing for Chapter 11 bankruptcy protection were self-imposed.
“The vast majority of Core Scientific’s issues are self-imposed and can be corrected with an open, transparent discussion and ongoing participation with its creditors and equity holders,” B. Riley noted.
The Texas-based crypto mining firm filing for bankruptcy is not the only shocking and tragic news circulating the internet. Due to the unstable and unfavorable bear market, more crypto companies keep filing or threatening to file for bankruptcy.
FTX, a cryptocurrency trading, and exchanges company, had also filed for bankruptcy in November, shaking the crypto community to its core and dragging along several crypto firms that were tied to it. Crypto firms like BlockFi, Celsius Network, and many more have all filed for bankruptcy, plunging the mood of crypto traders and investors into further disappointment.
Conclusion
Core Scientific joins the list of many crypto firms deeply affected by the ongoing crypto winter as the Texas-based company files for bankruptcy. The crypto community is worried about how long the bear market will last and how much more will be lost before it can finally rise to its feet as it once did.
