(Kitco News) -
Core Scientific, the largest Bitcoin miner by computing power, announced early Wednesday morning that they have filed for Chapter 11 bankruptcy, making them the first publicly-traded crypto miner to do so. The filing was made in the U.S. Bankruptcy Court for the Southern District of Texas.
“During this process and upon emergence, the Company will continue to operate its existing self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis,” they wrote, adding that they are “committed to operating normally during the implementation of its restructuring.”
According to a CNBC report, Core Scientific’s operations continue to generate positive cash flow, but it is insufficient to service the debt that the company took on to lease mining equipment. The company estimated their liabilities to be between $1 billion and $10 billion, and they have between 1000 and 5000 creditors.
On Oct. 26, Core Scientific submitted a filing with the Securities and Exchange Commission that showed they were in dire straits, writing that “the Company’s operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates (“Celsius”). As a result, management has been actively taking steps to decrease monthly costs, delay construction expenses, reduce and delay capital expenditures and increase hosting revenues.”
They also wrote that their board had decided not to make payments on their financing debts in late October and early November. “As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment or taking action with respect to collateral, where applicable. Any such creditor actions may result in events of default under the Company’s other indebtedness agreements, including its two series of convertible notes due 2025, and the potential exercise of remedies by creditors under such agreements.”
As of October 26, 2022, Core Scientific said they held “24 bitcoins and approximately $26.6 million in cash as compared to 1,051 bitcoins and approximately $29.5 million in cash as of September 30, 2022.”
Core Scientific’s share price has lost 98% of its value on the year, and is down from an all-time high of $14.32 in Nov. 2021 to just under $0.21 at yesterday’s close.
