Core Scientific which is one of the largest Bitcoin (BTC) mining companies in the world has warned that it could run out of cash by the end of 2022. Thus, it plans to file for bankruptcy after announcing earlier that it would not be able to meet its debt payments for the last quarter.
Therefore, if Core Scientific fails to improve its financial situation by raising additional capital or by restructuring the company and its debt, it will have to cease its activities.
Indeed, the company explained that its performance was seriously affected by the prolonged decline in the bitcoin cryptocurrency price which has fallen sharply from a price of $69,000 during its last peak to just over $20,000 today.
In addition to the dramatic drop in the price of bitcoin this year, miners have also been faced with a continuous increase in electricity and hashrate costs which has led to a decrease in their profits.
Additionally, a lawsuit with cryptocurrency lending platform Celsius Networks LLC and its affiliates has also put Core Scientific in serious financial trouble.
Celsius, once the world’s largest cryptocurrency lender, filed for bankruptcy protection in July 2022. The company allowed customers to deposit Bitcoin, Ether, and Tether among other things to charge then interest on a weekly basis to the borrowers.
Depending on when crypto deposits were made, the platform could offer up to 18% interest for one year.
Another cryptocurrency miner, Compute North, filed for Chapter 11 bankruptcy protection in September, while another miner, Marathon Digital Holdings, has $80 million in exposure. dollars.
Thus, Core Scientific has significantly reduced its Bitcoin holdings in the context of the current crisis.
Analyzing the statement filed with the Securities and Exchange Commission (the SEC) by Core Scientific, everything clearly indicates that the company will not be able to meet its debt payments on time.
In other words, Core Scientific is already virtually bankrupt. The formalization of this bankruptcy could be pronounced very soon if quick solutions are not found to bail out its coffers within the next few days.