Core Scientific might not survive: Why are all miners leaving?

Core Scientific says they don’t have the liquidity to survive 2022.
They accrued a $1.7 billion loss in the last two quarters.
The trio of stumbling blocks is to blame for players leaving the mining arena.

Another Bitcoin mining firm fell to the trio of stumbling blocks currently affecting the BTC miners. Increased electricity rates, increased difficulty and reduced BTC prices. Also, it is nearly impossible to predict when the BTC price will go up or when the energy prices will go down. This time it’s Core Scientific; they are in ‘substantial doubt’ of continuing without cash.

The BTC miner warned that its cash reserves are depleting fast and may end before the end of 2022. Given its financial uncertainty, the miner said it might not be able to sustain itself over the next 12 months in the market.

In its third quarter report filed with the Securities and Exchange Commission, the company claims to have suffered $434.8 million in losses; in the previous quarter, it was $862 million, totaling $1.71 billion with one quarter to spare.

If the company needs to survive another year, i.e., to November 2023, it will require additional liquidity.

“Given the uncertainty regarding the company’s financial condition, substantial doubts exist about the company’s ability to continue as a going concern through November 2023.”

Core Scientific also doubts the availability to raise the required liquidity through financing or capital market, and the time they are left with the current resources greatly reduces the availability of those types of liquidity.

In their previous filing, the company said that low BTC price, high energy costs, and refusal from the bankrupt crypto lender Celcius to repay a $2.1 million loan would further result in the depletion of their resources before the end of 2022.

To further reduce the financial stress, the company took some steps: reduced operating costs, reduced or delayed capital expenditures, and increased hosting revenue. Core Scientific also decided to hold the payments of some of the firms it had previously borrowed from. The company might be sued for the step or have to pay the increased rates in the future.

In his tweet, the founder of asset manager Capriole investment, Charles Edward, says that more miners will leave the arena if the price of BTC falls below the cost of mining.

Bitcoin miners are “unplugging their hardware” because “the units produce insufficient cashflow.”
Iris Energy bankrupt.
This is what happens when we spend time below the Bitcoin Electrical Cost. It no longer makes sense for many to run their mining rigs. pic.twitter.com/kjrC6j3KVf
— Charles Edwards (@caprioleio) November 22, 2022

Core Scientific has joined the bandwagon of other Bitcoin miners facing almost similar issues, the members being; Argo Blockchain, Marathon Digital, Iris Energy, Riot Blockchain, And Valkyrie.

The ongoing trend of big crypto mining companies going through such tough times is alarming. God forbid, but what if these companies were to shut their doors? If these big companies could not survive, how independent miners will? What will happen to the currency’s proof-of-work protocol if no miners are left?

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing