As reported by CNBC, Core Scientific is filing for Chapter 11 bankruptcy in Texas on the morning of Dec 21 after months of struggling with plunging Bitcoin prices and soaring energy costs. It all started in June 2022 when the crypto market wobbled due to the collapse of LUNA/UST, miners were forced to dump BTC at low prices (around $17,000 – $19,000) to cover costs. Core Scientific is no exception, selling up to $167 million in BTC this month.
However, it didn’t seem to be enough to keep Core Scientific in business, the company decided to issue $100 million of shares to the bank over two years to enhance liquidity. Difficulties continued with the crash of Celsius, 3AC and finally FTX. Core Scientific had to admit that it was on the verge of bankruptcy at the end of Oct 2022.
Core Scientific’s market cap has dropped to just $78 million from a valuation of $4.3 billion in July 2021 when the company went public through a special purpose acquisition vehicle, or SPAC. Core Scientific stock (CORZ) has fallen more than 98% from a peak of $15.09 to $0.2084 at the time of writing.
The source also said Core Scientific is still generating positive cashflow but that cash is not enough to pay the debt owed on equipment it was leasing. The company will not liquidate, but will continue to operate normally while reaching an agreement with creditors, who hold the majority of the company’s debt. Core Scientific is about to disappear from the list of publicly traded crypto mining companies that hold the most Bitcoin in the world, leaving the playing field to Marathon Digital Holdings and Riot Blockchain in the US market.
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