Bitcoin Miner Core Scientific Says It May Seek Bankruptcy

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Core Sci­en­tif­ic, one of the world’s largest min­ers of Bit­coin, warned that it may run out of cash by the end of the year and could seek relief through bank­rupt­cy pro­tec­tion. Bloomberg reports: Oper­at­ing per­for­mance and liq­uid­i­ty have been severe­ly impact­ed by the pro­longed drop in the price of Bit­coin, a rise in elec­tric­i­ty costs, increased com­pe­ti­tion and lit­i­ga­tion with bank­rupt Cel­sius Net­works LLC, the Austin, Texas-based com­pa­ny said in a US Secu­ri­ties and Exchange Com­mis­sion fil­ing on Thurs­day. Shares of Core Sci­en­tif­ic dropped 78% on Thurs­day, its worst trad­ing day since going pub­lic ear­li­er this year through a merg­er. Bit­coin min­ing com­pa­nies such as Core Sci­en­tif­ic had recent­ly been increas­ing­ly opt­ing to sell equi­ty, resort­ing to one of their least attrac­tive options to raise mon­ey as prof­its dry up and high­er inter­est rates makes bor­row­ing more expen­sive. The com­pa­ny entered into a $100 mil­lion com­mon stock pur­chase agree­ment with B. Riley Prin­ci­pal Cap­i­tal II in July. Bit­coin has slumped almost 70% since reach­ing a record high in Novem­ber 2021.

“We could see sim­i­lar fil­ings with­in the sec­tor,” said Bri­an Dob­son, an ana­lyst at Chardan Cap­i­tal, who had a ‘buy’ rat­ing on the shares. “This is going to weigh on all of the pub­licly trad­ed cryp­to min­ers.” Should Core Sci­en­tif­ic file for bank­rupt­cy, it would like­ly be the first large pub­licly trad­ed Bit­coin min­er to do so, Dob­son said. Core Sci­en­tif­ic said it won’t make pay­ments com­ing due in late Octo­ber and ear­ly Novem­ber with respect to sev­er­al of equip­ment and oth­er financ­ings, includ­ing two bridge promis­so­ry notes. The com­pa­ny is explor­ing alter­na­tives, includ­ing hir­ing strate­gic advis­ers, rais­ing addi­tion­al cap­i­tal or restruc­tur­ing its exist­ing cap­i­tal struc­ture. Core Sci­en­tif­ic held 24 Bit­coins and approx­i­mate­ly $26.6 mil­lion in cash as of Thurs­day. That’s com­pared with 1,051 Bit­coins and about $29.5 mil­lion in cash as of Sep­tem­ber, the com­pa­ny said in the fil­ing. The shares, which trad­ed as much as $14.32 late last year, closed at 22 cents. they’ve tum­bled 98% since the start of the year.

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