Core Scientific’s 104 megawatt Bitcoin mining data center in Marble, North Carolina
Core Scientific, one of the largest publicly traded crypto mining companies in the US, is filing for Chapter 11 bankruptcy protection in Texas early Wednesday morning, according to a person familiar with the company’s finances. The move follows a year of falling cryptocurrency prices and rising energy prices.
Core Scientific mines for proof-of-work cryptocurrencies like bitcoin. The process involves powering data centers around the country, brimming with highly specialized computers that process mathematical equations to validate transactions while creating new tokens. The process requires expensive equipment, some technical knowledge and a lot of electricity.
Core’s market cap had fallen to $78 million by the end of Tuesday, down from a valuation of $4.3 billion in July 2021 when the company went public through a special purpose acquisition vehicle, or SPAC. The stock is down more than 98% in the past year.
The company is still generating positive cash flow, but according to a person familiar with the company’s situation, that cash isn’t enough to pay back the financing debt it owed on equipment it was leasing. The company will not liquidate but will continue to operate normally while it reaches a deal with senior security noteholders who hold the majority of the company’s debt, said this individual, who declined to be named due to discussing confidential company matters .
Core had previously said in an October filing that holders of its common stock could suffer “a total loss of their investment,” but that may not be the case if the overall industry recovers. The deal struck with Core convertible bond holders is structured so that if the business climate for bitcoin actually improves, common stock holders may not be completely wiped out. The company also announced it would default on its debt payments in late October and early November — and said creditors were free to sue the company for non-payment.
Core, which primarily mints bitcoin, has seen the price of the token drop from a record high of over $69,000 in November 2021 to around $16,800. to be profit margins.
The Austin, Texas-based miner, which operates in North Dakota, North Carolina, Georgia and Kentucky, said in its Oct. “, as well as “the increase in the hash rate of the global bitcoin network” – a term used to describe the computing power of all miners in the bitcoin network.
Crypto lender Celsius, which filed for bankruptcy protection in July, was a Core client. When Celsius’ debts were wiped out during the bankruptcy proceedings, it put a strain on Core’s balance sheet, yet another example of the contagion effect rippling across the crypto sector this year.
Core – one of the largest providers of blockchain infrastructure and hosting, as well as one of the largest digital asset miners in North America – is not alone in its struggle.
Compute North, which provides crypto mining hosting services and infrastructure, filed for Chapter 11 bankruptcy in September, and another miner, Marathon Digital Holdings, reported $80 million exposure to Compute North.
Meanwhile, Greenidge Generation, a vertically integrated crypto miner, reported a net loss of more than $100 million in its second quarter in August and dropped plans to expand into Texas. And Argo’s shares plummeted 60% after announcing on Oct. 31 that the plan to raise $27 million from a “strategic investor” was no longer going ahead.