Core Scientific, one of the world’s biggest bitcoin mining stocks, is reportedly preparing to file for bankruptcy on Wednesday after struggling under the weight of its debt.
The Texas-based firm’s cash flow is reportedly still positive but insufficient to repay an equipment financing loan, per CNBC, which cited a source familiar with the matter.
Core Scientific is said to have plans to continue mining while repaying the company’s majority debtholders.
The firm disclosed in a securities filing dated Nov. 21 that it didn’t have enough cash to last through 2023. It also flagged doubts about its ability to raise funds through financing or capital markets.
In that filing, Core Scientific said it expects existing cash resources to be exhausted by “the end of 2022 or sooner.” Core Scientific is now reportedly filing for Chapter 11 bankruptcy just one month later.
The firm was just one of many bitcoin mining operations to take out high-interest loans to fund rapid expansions and bolster rig inventories during the heat of last year’s bull market. Loans were often collateralized with existing ASIC reserves.
But rising electricity prices, falling crypto markets and sky-high mining difficulty left many companies, including Core Scientific, without enough revenue to cover debt obligations. Core Scientific said in October it would skip upcoming payments on several loans.
The miner ended October with $32.2 million in cash and just 62 BTC ($1 million), a far bleaker picture than September when it held 1,051 BTC ($17.7 million) and $29.5 million in cash.
All this has obviously weighed heavily on Core Scientific stock, which is down 98% in 2022. The firm’s share price tanked a further 30% in pre-market trading Wednesday following news of its impending bankruptcy filing.
Direct rivals Marathon and Riot have shed 88% and 83% from their share prices this year, respectively. Core Scientific didn’t return Blockworks’ request for comment by press time.
There could be further bitcoin mining bankruptcies on the horizon. London-based outfit Argo Blockchain earlier this month warned shareholders it was threatened by “insufficient cash” and made no assurances of avoiding bankruptcy.
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Source: https://blockworks.co/news/bitcoin-miner-core-scientific-to-file-bankruptcy-stock-tanks-30