Core Scientific, one of the largest Bitcoin miners, said it could file for bankruptcy as the myriad pressures facing the industry drain its cash resources.
In a statement released to shareholders Thursday morning, the company said it was exploring a number of options and would not pay any of its debts due over the next few days.
“Given the uncertainty surrounding the Company’s financial condition, substantial doubt exists as to the Company’s ability to continue as a going concern for a reasonable period of time.”
Shares of the Nasdaq-listed company fell 70% in early trading after the announcement.
Core Scientific said it was “severely impacted by the prolonged decline in the price of bitcoin, rising electricity costs, increased global bitcoin network hash rate, and litigation with Celsius.”
Bankrupt crypto lender Celsius owes Core millions in unpaid electricity rates, according court documents documents filed earlier this month. The miner said in the court filing that he was losing around $53,000 a day to cover what Celsius refused to pay.
As of Wednesday, Core held 24 BTC (just under $495,000 at today’s prices) and about $26.6 million in cash, a much depleted reserve compared to a few weeks earlier on September 30, when he had 1,051 BTC ($21.6 million) and $29.5 million. .
The amount of Bitcoin the company has on hand has rapidly declined over the past few months as it has been forced to discharge more than he extracted in order to meet the costs. In July, the company sold over 7,000 BTC in an effort to shore up its balance sheet.
“It is very difficult to estimate our future cash requirements,” the Thursday morning statement said. “The company expects existing cash resources to be depleted by the end of 2022 or sooner.”
Challenges for miners
Bitcoin’s sustained low price coincided with high energy costs and market turmoil to cause a perfect storm of pressure on miners.
Earlier this week, new data showed that competition between bitcoin miners had reached a new all-time high, adding more unhappiness to miners.
With The price of bitcoin still hovering around the $20,000 mark, as it has since mid-June, that means only those with the latest kit are able to break even.
And miners’ ability to ride out the crypto winter is dwindling, with reserves at a Low for 12 years.
Core would not be the first victim of the industry turmoil. Bitcoin Mining Data Center Company Last Month Compute North has filed for bankruptcywhile Digihost, another Nasdaq-listed miner, is in the face of a possible refund of the stock market after a huge drop in its share price.
Many companies in the sector are now explore other activitiesincluding some outside the blockchain world, to stay afloat.
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