Creditors Seek Legal Advice on Bitcoin Miner
Bitcoin Miner Core Scientific is in financial distress and may miss payments due in Nov. It might also be considering bankruptcy.
Bitcoin miner Core Scientific is reportedly exploring bankruptcy as it undergoes financial problems. As a result, creditors are working with a legal firm to examine their options. Bloomberg first reported the news, citing sources close to the matter.
Core Scientific Cannot Meet Payments
Core Scientific is one of the world’s largest Bitcoin miners, saying last week that it would not be able to meet its payments in Oct. and Nov. This has spurred a group of convertible bondholders to speak with restructuring lawyers.
Bloomberg reports that Core Scientific holds roughly 24 B
Bitcoin and $26.6 million in cash. The company’s stock value has dropped by over 80% in the past five days, down to $0.18 per share. It went public earlier this year as it went through a merger.
The drop in Bitcoin’s value in 2022 has hit many in the market hard, and miners especially have suffered. Energy costs have also risen, adding to the woes of a once lucrative segment of the market.
These companies have found it hard to raise liquidity in the midst of crypto winter. If Core Scientific does go under, it would be another high-profile entity to do so. It has also dropped Ernst and Young as an external auditor.
BTC Miners Employ New Strategies
Core Scientific isn’t the only mining company to be facing trouble. The industry is experiencing a shift in how they run their businesses, as low prices hit their operations hard.
BitMine Immersion Technologies entered a line of credit with Innovative Digital Investors Emerging Technology to the tune of $1 million. This would be used to purchase equipment for operation and related working capital. It is also shifting its primary business to self-mining.
Meanwhile, Argo Blockchain saw its shares drop by roughly 40% as a $27 million fundraiser failed to materialize. The company said that if it did not manage further financing, it would become cash flow negative or need to curtail or cease operations.
BTC Miners Experiencing High Stress
Mining pools like Poolin are also suffering from a liquidity crisis. In Sept., it announced that it was suspending withdrawals, flash trades, and internal transfers because of this. The hash rate has dropped, which also took a toll on the mining revenue.
The overall drop in hash rates and increasing prices are the primary reasons behind the miners’ stress. Miner reserves are at a 12-year low, down to just 1.91 million BTC. Miners are selling about 8,000 Bitcoin a month to cover expenses, according to Glassnode.
Disclaimer
All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
