Core Scientificone of the largest Bitcoin mining companies, has filed for bankruptcy amid falling cryptocurrency prices and sharply rising energy prices, becoming the latest victim of this crypto winter.
On Wednesday, the company filed for Chapter 11 bankruptcy protection in Texas. The filing notes that Core Scientific has $1 billion to $10 billion in assets, and also $1 billion to $10 billion in liabilities.
The company attributed its bankruptcy to an unpaid debt of $7 million from Celsius Networka crypto lending company that is also bankrupt, in addition to collapsing cryptocurrency prices and rising mining energy costs.
In court filings, Core Scientific said it suffered a net loss of $434.8 million for the three months ending September 30, 2022, and had only $4 million in cash at the time of its filing. balance sheet. The company had revealed that the probability of bankruptcy had been considered as early as the end of October.
Core Scientific primarily focuses on mining proof-of-work cryptocurrencies like Bitcoin. The process, which requires expensive equipment and a large volume of electricity, involves powering data centers across the country filled with highly specialized computers dedicated to solving mathematical equations to validate transactions and create simultaneously new tokens.
Core Scientific reached a record valuation of $4.3 billion in mid-2021 when the company went public through a special purpose acquisition vehicle, or SPAC. However, the company’s market capitalization fell to $78 million on Tuesday as its stock fell more than 98% in the past year.
Besides Core Scientific, other mining companies are also struggling amid the market downturn. Argo Blockchain, Iris Energy and Greenidge Generation are among the most notable companies to face financial problems.
This year has been one of the worst on record for the crypto industry, with the market losing over $1 trillion in value. Rising interest rates and heightened fears of an economic slowdown contributed to the collapse in prices.
If the crypto market crash eliminated key players in the industry, such as the crypto hedge fund Three Arrows Capital and Celsiusthe industry suffered a real setback after the collapse of FTX, which was once the third largest crypto exchange in the world. FTX began filing for bankruptcy under bankruptcy law last month.
As indicated, Sam Bankman-Friedthe founder of FTX, was arrested in the Bahamas earlier this month after U.S. prosecutors formally filed criminal charges against him.
The Southern District of New York has charged SBF with eight criminal counts, including wire fraud and conspiracy to embezzle client funds. Separately, the Securities and Exchange Commission accused SBF of “orchestrated a scheme to defraud FTX stock investors”.
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