One of the largest mining companies in the US, Core Scientific, filed for bankruptcy after falling cryptocurrency prices and rising energy prices, but is going to continue mining.
This is reported CNBC with reference to sources.
Core Scientific mines reliable cryptocurrencies like Bitcoin. The process involves connecting data centers across the country, equipped with highly specialized computers that process mathematical equations, to validate transactions and create new tokens at the same time.
Core’s market capitalization fell to $78 million as of the end of trading on Tuesday, compared to an estimate of $4.3 billion in July 2021. Stocks have fallen over 98% in the past year.
The company is still generating positive cash flow, but this cash is not enough to pay off the financial debt for the equipment it rents, according to a source familiar with the situation at the company.
The interlocutor added that the company will not be liquidated, but will continue to operate as usual, reaching an agreement with the holders of senior securities holding the bulk of the company’s debt.
The company said in October that its common stock holders could suffer “a total loss of their investment,” but this may not happen if the industry recovers.
The company also said it would not pay debts in late October and early November and said creditors could sue the company for non-payment.
At Core, which primarily produced bitcoin, the price of the token fell from an all-time high of over $69,000 in November 2021 to around $16,800.
This loss of value, combined with increased competition among miners and higher energy prices, has led to a reduction in profits.
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