Publicly traded bitcoin miner Core Science (CORZ) filed for Chapter 11 bankruptcy protection in federal bankruptcy court in the Southern District of Texas early Wednesday morning.
Bankruptcy application, according to the company’s application notificationis the result of a combination of the falling bitcoin price, rising electricity costs needed to power its data centers, and the “failure of some hosting customers to honor their payment obligations.” their math.”
The bitcoin-specific data storage and processing company said in its Chapter 11 lawsuit that it has assets and liabilities estimated at $1 to $10 billion, between 1,000 and 5,000 creditors, and that its funds are readily available. for distribution to unsecured creditors.
Shares of Core Scientific fell more than 25% in pre-market trading on Wednesday.
Core Science went public through the SPAC merger in April 2021. By November 2021, the stock closed at a high of $14.32 a share. Shares are down more than 98% this year.
Bitcoin (BTC-USD) has sold off 65% this year to $16,865 from $47,881 per coin. Along with soaring energy prices, Bitcoin miners have been hit hard. Another major Texas-based bitcoin mining operator, Compute North, filed for bankruptcy in September, owing up to $500 million to at least 200 creditors.
More recently, Greenidge Generation (GREE), another publicly traded miner based in Dresden, New York, said it had to renegotiate about $74 million in debt owed to NYDIG to purchase mining equipment. If the company is unable to restructure its debt, it can file for bankruptcy. Greenidge stated that even if bankruptcy is avoided, “the Company’s prospects of operating a viable hosting business are uncertain”. submit.
On October 26, Core Scientific showed clear signs of coercion, announced in a submit with the SEC, it will not make debt payments due in October and November. Within the next 24 hours, its shares fell more than 76%. In recent months, Core Science shares have been trading as penny stocks, ranging between 20 and 40 cents per share.
The company has also been tied up in the ongoing bankruptcies of Celsius Network and BlockFi, with Core accusing the company of being lose almost 2 million dollars a month after Celsius’ Chapter 11 submission, while BlockFi emerged in the fall as Core’s creditor, on hooks for up to $60 million in loans.
Over the course of its chapter 11, Core Science plans to continue operating its own bitcoin mining and storage business “while maintaining substantial positive cash flow on a debt-free basis,” according to the announcement. bankruptcy report liberate, release, free.
As part of the corporate restructuring, Core has also assembled a “Special Owners Group” that has agreed to commit to a loan of up to $75 million through its “owning debtor” facility. “. Those loans, in addition to daily bitcoin mining profits, will fund the restructuring of the company.
According to Matthew Sigel, head of digital asset research at financial product issuer VanEck, the predicament among Bitcoin miners has been the consistent cause of the crypto sell-off. biggest. This sale of mined lead is likely to continue into 2023, Sigel said.
“We think it is possible and likely Bitcoin will test $10,000 to $12,000 amid the wave [bitcoin] the mining company went bankrupt,” Sigel said in a recent press conference.
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