Bitcoin miner Core Scientific files for bankruptcy

Company responsible for 10% of the computing power of the Bitcoin network files for bankruptcy

Mining Rigs                                 
Core Scientifc’s stock has sunk by more than 98% since the start of the year – Photo: Shutterstock
                                

Core Scientific, one of the world’s largest bitcoin miners, has filed for Chapter 11 bankruptcy protection, becoming the latest casualty of the 2022 “Crypto Winter’. 

The company filed for bankruptcy at the Southern District of Texas bankruptcy court in the United States, with estimated liabilities of between $1bn and $10bn and estimated assets of between $1bn and $10bn. Its creditors ranged between 1,000 and 5,000 individuals and entities. 

Last week, the miner’s largest unsecured creditor, B. Riley, proposed a $72m financing plan, including $40m of financing “immediately” and “zero contingencies”. The remainder of the funds in the plan would have been made available if Bitcoin rose to $18,500. 

Core Scientific went public in January 2022 after merging with Power & Digital Infrastructure Acquisition in a special purpose acquisition company (SPAC). 

The shift that occurred in 2022 away from the Covid era of low interest rates and central bank market support and towards higher interest rates to tackle inflation severely affected cryptocurrencies and crypto-related equities. 

Bitcoin, the world’s largest cryptocurrency, has fallen by 65% since the start of the year, while Core Scientifc’s stock has sunk by more than 98%. 

The latest victim of the 'Crypto Winter'

In October, Core Scientific ran 243,000 machines in its facilities and was responsible for around 10% of computing power on the bitcoin network. 

That month, the company announced it would not be paying some of its loan installments, prompting an 80% decline in its stock price. In November, Core Scientific admitted that it may run out of funds by the end of the year. 

The company’s decline is in part a consequence of the earlier collapses suffered by the crypto lenders Celsius and BlockFi, two of its largest clients. 

Core Scientific’s rivals have thus far managed to stay afloat. However, all have suffered substantial decline. Riot Blockchain and Marathon Digital’s stock have fallen by 83% and 88% respectively since the start of the year.

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