Bitcoin Miner Core Scientific Says It May Seek Bankruptcy

Core Scientific, one of the world's largest miners of Bitcoin, warned that it may run out of cash by the end of the year and could seek relief through bankruptcy protection. Bloomberg reports: Operating performance and liquidity have been severely impacted by the prolonged drop in the price of Bitcoin, a rise in electricity costs, increased competition and litigation with bankrupt Celsius Networks LLC, the Austin, Texas-based company said in a US Securities and Exchange Commission filing on Thursday. Shares of Core Scientific dropped 78% on Thursday, its worst trading day since going public earlier this year through a merger. Bitcoin mining companies such as Core Scientific had recently been increasingly opting to sell equity, resorting to one of their least attractive options to raise money as profits dry up and higher interest rates makes borrowing more expensive. The company entered into a $100 million common stock purchase agreement with B. Riley Principal Capital II in July. Bitcoin has slumped almost 70% since reaching a record high in November 2021.

'We could see similar filings within the sector,' said Brian Dobson, an analyst at Chardan Capital, who had a 'buy' rating on the shares. 'This is going to weigh on all of the publicly traded crypto miners.' Should Core Scientific file for bankruptcy, it would likely be the first large publicly traded Bitcoin miner to do so, Dobson said. Core Scientific said it won't make payments coming due in late October and early November with respect to several of equipment and other financings, including two bridge promissory notes. The company is exploring alternatives, including hiring strategic advisers, raising additional capital or restructuring its existing capital structure. Core Scientific held 24 Bitcoins and approximately $26.6 million in cash as of Thursday. That's compared with 1,051 Bitcoins and about $29.5 million in cash as of September, the company said in the filing. The shares, which traded as much as $14.32 late last year, closed at 22 cents. they've tumbled 98% since the start of the year.

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