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Crypto Mining Company Core Scientific Files For Bankruptcy

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Core Scientific has joined a long list of crypto-related businesses that have filed for Chapter 11 bankruptcy protection. The company’s stock price has fallen more than 98% in the last year.

Core Scientific Files For Chapter 11 Bankruptcy

According to a source with knowledge of the company’s finances, Core Scientific, a publicly traded crypto-mining company headquartered in the United States, has filed for Chapter 11 bankruptcy protection. Core Scientific’s business includes mining Bitcoin and other proof-of-work cryptocurrencies.

The move follows a number of factors that have contributed to the sharp decline in cryptocurrency prices, including rising energy costs and the increasing difficulty of mining assets. In addition, Core Scientific has $7 million of unpaid debt from its biggest customer, crypto lender Celsius Network.

The mining industry experienced a difficult time during the bear market. Hosting provider Compute North filed for Chapter 11 protection in September, while Argo Blockchain and Greenidge Generation have also recently expressed concern about bankruptcy.

Core Scientific’s Market Capitalization Has Fallen More Than 98%

Core Scientific’s market capitalization has fallen more than 98% in the last year, dropping from $4.3 billion in July 2021 to $41.73 million at the time of writing this article. It had previously said in a filing in October that investors who held its common stock could lose all of their investment. Issuing a warning that it might run out of cash by the end of the year and said it was evaluating several options. 

The company is generating positive cash flow, but its current level of cash is not enough to repay the financing debt it owes on leased equipment. Moreover, the company said it would not be liquidated and that it would continue to operate normally, as it expects to enter into a restructuring support agreement with the creditors who represent over 50% of the holders of its convertible notes.

Last week, B. Riley Financial, one of its largest creditors, extended a $72 million lifeline to help keep the company out of bankruptcy. B. Riley said that bankruptcy is not necessary at all. In their opinion, Core Scientific’s issues are self-imposed and can be corrected if the company has an open, transparent discussion with its creditors and equity holders.

John Asher

John Asher

I am a crypto-enthusiast that likes to write about the blockchain industry. Mostly, I'm interested in the gaming industry and how it will revolutionize in-game asset ownership.

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