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As Bankruptcy Fears Mount, Creditors Seek Legal Advice on Bitcoin Miner Core Scientific

2 mins
Updated by Geraint Price
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In Brief

  • Bitcoin miner Core Scientific might consider bankruptcy, according to a Bloomberg report.
  • The company holds about 24 Bitcoins and $26.6 million and may miss due payments.
  • Other mining companies are also under financial stress as liquidity issues, lower hash rates, and increasing energy costs hit the market.
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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 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.

Core Scientific Bankruptcy
CORZ Chart by TradingView

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.

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Rahul Nambiampurath
Rahul Nambiampurath's cryptocurrency journey first began in 2014 when he stumbled upon Satoshi's Bitcoin whitepaper. With a bachelor's degree in Commerce and an MBA in Finance from Sikkim Manipal University, he was among the few that first recognized the sheer untapped potential of decentralized technologies. Since then, he has helped DeFi platforms like Balancer and Sidus Heroes — a web3 metaverse — as well as CEXs like Bitso (Mexico's biggest) and Overbit to reach new heights with his...