Core Scientific, one of the world’s largest Bitcoin miners, has reportedly filed for Chapter 11 bankruptcy protection in Texas today. The decision was made due to financial difficulties caused by falling cryptocurrency prices and high energy costs.
According to the report, the company’s market capitalization has dropped from $4.3 billion in 2021 to $78 million.
Core Scientific is still generating positive cash flow, but not enough to pay off the debt on the equipment it leases. The company will continue to operate normally while it negotiates a deal with senior security stakeholders who hold the majority of the company’s debt.
Last week, the company received $72 million from B.Riley, a crypto lender, to avoid bankruptcy. Despite the loan, Core was unable to operate efficiently and repay its debt. B.Riley also commented on the firm’s condition, saying:
“Bankruptcy is not necessary at all, and the vast majority of Core Scientific’s issues are self-imposed and can be corrected with an open, transparent discussion and ongoing participation” with its lenders and investors.”
The company had exposure to Celsius Network, the now-bankrupt crypto lender. Core Scientific provided hosting services to Celsius Mining, a subsidiary of Celsius Network, and is owed around $5.4 million.
Core Scientific is a company that provides infrastructure for blockchain computing, digital asset mining, and other services for the financial ecosystem. It’s commonly known for mining Proof-of-Work cryptocurrencies like Bitcoin.
Since the start of the crypto bear season in March, the prices of crypto tokens have been at an all-time low, which has not been great for most businesses. Other mining companies, such as Argo Blockchain and Iris Energy, also face the risk of filing for bankruptcy.
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