A prominent Bitcoin (BTC) and crypto mining company is reportedly filing for Chapter 11 bankruptcy as the bear market takes its toll on the industry.
Core Scientific, one of the industry’s largest publicly traded miners, is filing for bankruptcy protection in Texas after its shares plummeted 98% this year, according to a new report from CNBC.
However, the company still reports potential cash flow and plans to continue operations and repay its debt without liquidating its assets, an anonymous source familiar with the situation told CNBC.
Core Scientific originally went public through a special purpose entity (SPAC) in July 2021, but soon ran into trouble when its market cap fell from $4.3 billion to $78 million, according to the report. The company is believed to have controlled around 10% of the hash rate on the Bitcoin network at its peak.
In October, Core Scientific filed a filing informing its common shareholders that they could suffer a total loss of their investments, mainly due to the falling price of BTC, which is now over 75% below its all-time highs. The company also cited rising overheads and ongoing litigation with Celsius, a crypto broker that filed for bankruptcy earlier this year, as reasons for its struggles.
As indicated by Core Scientific in the filing,
“As previously announced, the Company’s operating performance and liquidity have been strengthened by the continued decline in the price of bitcoin, the increase in electricity costs, the increase in the global hash rate of the bitcoin network, and the litigation with Celsius Networks LLC and its affiliates impaired.”
Bitcoin is changing hands for $16,823 at the time of writing, a fraction of the day.
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