Bitcoin miner Core scientific files for bankruptcy

Publicly traded bitcoin mining company Core Scientific (CORZ) filed for Chapter 11 bankruptcy protection in a federal bankruptcy court in the Southern District of Texas early Wednesday morning.The bankruptcy petition, according to the company’s announcement, resulted from a combination of a declining bitcoin price , rising electricity costs needed to power its data centers and “failure by certain of its hosting customers to honor their payment obligations.” The bitcoin specific data processing and hosting company said in its Chapter 11 petition it has between $1 and $10 billion in estimated assets. and liabilities, between 1,000 to 5,000 creditors, and its funds are available for distribution to unsecured creditors. Shares of Core Scientific were down more than 25% in pre-market trade on Wednesday. Core Scientific went public through a SPAC merger in April 2021. By November of 2021, shares had closed as high as $14.32 per share. The stock has dropped more than 98% this year. Bitcoin (BTC-USD) has sold off by 65% ​​this year down to $16,865 from $47,881 per coin. Coupled surging energy prices, Bitcoin mining companies have been hit especially hard. Another major Texas based bitcoin mining operator, Compute North, filed for bankruptcy in September, owed as much as $500 million to at least 200 creditors. More recently, Greenidge Generation (GREE), another public miner based in Dresden, New York, has said it must renegotiate approximately $74 million in debt owed to NYDIG for the purchase of mining equipment. If the company is unable to restructure its debt, it may file for bankruptcy. Even if bankruptcy is avoided, “the Company’s prospects for operating a viable hosting business are uncertain,” Greenidge stated in a filing. On October 26, Core Scientific showed clear signs of duress, announcing in a filing with the SEC it would not make debt payments due in October and November. Within the next 24 hours, its stock fell by more than 76%. In recent months, Core Scientific shares have traded as a penny stock, floating between twenty and fourty cents per share. Story continuesWorkers install a new row of Bitcoin mining machines at the Whinstone US Bitcoin mining facility in Rockdale, Texas, on October 9, 2021 (Photo by Mark Felix / AFP) (Photo by MARK FELIX/AFP /AFP via Getty Images)The company has also gotten tied up in the ongoing bankruptcies of Celsius Network and BlockFi, with Core alleging the company was losing nearly $2 million a month following Celsius’ Chapter 11 filing, while BlockFi emerged in the fall as a creditor to Core, on the hook for up to $60 million in loans. During its chapter 11 process, Core Scientific plans to continue operating its own bitcoin mining and hosting business “which remained significantly cash flow positive on a debt-free basis,” according to its bankruptcy release. As part of the company’s restructuring, Core has also assembled a “Ad Hoc Noteholder Group” that has agreed to commit up to $75 million in loans through a “debtor-in-possession” facility. Those loans, in addition to daily bitcoin mining profits, will finance the company’s restructuring. Distress among Bitcoin mining firms has been a consistent contributor to the largerst cryptocurrency’s sell off according to Matthew Sigel, head of digital assets research with financial product issuer, VanEck. This miner lead selling is likely to continue into 2023 says Sigel.”We think it’s possible, and possibly likely that Bitcoin will test the $10,000 to $12,000 level amidst a wave of [bitcoin] miner bankruptcies,” Sigel said in a recent press briefing. Click here for the latest crypto news, updates, values, prices, and more related to Bitcoin, Ethereum, Dogecoin, DeFi and NFTsRead the latest financial and business news from Yahoo FinanceDownload the Yahoo Finance app for Apple or AndroidFollow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube

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