another effect of the crypto meltdown

The cryptocurrency crisis goes beyond the collapse of FTX, doubts about the stability of Binance and the fall in the price of the main digital currencies. The aforementioned succession of events, added to the general increase in the price of electricity, has become a perfect storm that seems to be hitting the crypto mining industry.

Bloomberg notes that Core Scientific, one of the largest players in cryptocurrency mining, has just filed for bankruptcy. The company had seen how their shares depreciated over the months, capping a 98% drop in one year and adding an additional 40% loss after filing for US Bankruptcy.

Core Scientific is not the only one affected

The company attributes its current situation to the fall in the price of Bitcoin as well as to the increase in the price of electricity. He says that although he has significant cash flow, this It is not enough to cover the financial debt of around 275 million dollars related to the investment made in infrastructure and specialized equipment to mine cryptocurrencies.

Core Scientific has 243,000 specialized ASIC kits. He used 143,000 to develop his own cryptocurrency mining business and the rest was rented out to other players in the industry, such as the recently disgraced Celsius Network. In total, its operations contribute nothing more and nothing less than 10% of the calculation capacity that protects and keeps the Bitcoin network active.

The company’s intentions, according to its bankruptcy filing, are to continue mining cryptocurrencies and launch a restructuring process to comply with its creditors. The main losers in this situation are the holders of shares, who could suffer a total loss of your investment if the sector does not recover and the company recovers part of its business.

Core Scientific, however, is not the only crypto mining company in trouble. According to CNBC, Compute North filed for Chapter 11 of the United States Bankruptcy Law last September. Greenidge Generation, for its part, has posted quarterly losses of more than $100 million and has warned it could also file for bankruptcy.

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But not everything is dark in the crypto world. Some giants of the economic sector trust and place their bets. Goldman Sachs is taking advantage of the current industry outlook to invest Millions of dollars in crypto companies. In fact, according to Reuters, it has already started the procedure of due diligence in several of them with the aim of buying them, although their names are unknown.

Images: brian wangenheim

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