One of the biggest US-based Bitcoin mining companies Core Scientific has filed for bankruptcy in Texas, according to a source familiar with Core Scientific’s finances.
The filling of chapter 11 follows murky crypto waters, with fluctuating prices and rising energy costs. The company mines for Bitcoin and other proof-of-work cryptocurrencies. The mining process consists of powering data centers across the United States, made from computers specially designed for crunching equations needed to verify and validate transactions and mint fresh tokens at the same time. Mining for crypto needs costly equipment, tech IQ, and a lot of power.
At the end of trading on 20 December 2022, Core Scientific’s market valuation fell from a USD 4.3 billion in July 2021 to USD 78 million. The valuation in July 2021 followed the company’s going public through SPAC (special purpose acquisition vehicle). This translates into the stock falling over 98% in 2022.
However, the company is still producing beneficial cashflow. So far, the resulting cash is not enough for the repayments on leased equipment, as stated by a source. Despite all this, the company is determined to not liquidate and continue its operations as usual provided that it reaches a compromise with the noteholders that hold the majority of Core’s debt.