Bitcoin Mining Giant Core Scientific Bankruptcy
Bitcoin Mining Giant Core Scientific Bankruptcy: The world’s largest bitcoin miner, Core Scientific, announced that it stopped all debt payments in a filing with the US Securities and Exchange Commission.
Core Scientific, a pioneer in blockchain technology, announced in a statement with the SEC that the board had determined the business would forgo payments due in late October and early November.
The prolonged decline in the price of Bitcoin, the rise in electricity prices, the increase in the hash rate of the entire Bitcoin network, and the legal dispute with Celsius Networks LLC have all hurt Core Scientific’s operating performance and liquidity.
By 2022, Core Scientific estimates that they may have exhausted their cash reserves. As of October 26th, the Company has 24 BTC and about $26.6 million in cash. On September 30, they had 1,051 BTC and almost $29.5 million in cash. Today, CORZ opened roughly 70% lower.
More Bitcoin Miners Capitulate Like Core Scientific?
- The Bitcoin hashrate is at an all-time high, per Glassnode’s data. The rise in the Bitcoin hash rate signifies increased mining competition. Power consumption rises as Bitcoin mining becomes more challenging.
- Even so, the price of bitcoin has dropped by around 70% since reaching an all-time high in November, which hurts miners’ profitability.
- The Production Cost Floor for Bitcoin is currently centered at $17,000. It is the price that miners pay to create new Bitcoins. The Production Cost Floor is increasing, according to Charles Edwards, a cryptocurrency industry expert and the owner of Capriole Investments.
- It is due to various factors, including a rising hash rate, rising power use, and rising electricity prices.
- The once-largest publicly traded miner, Core Scientific, has nearly capitulated. The locals think that the likelihood of other such stories is increasing.
Legal Trouble With the Bankrupt Celsius Network
- With the defunct Celsius Network, Core Scientific had a deal to supply the hosting infrastructure. According to the agreement, Celsius owns the devices and receives compensation for any cryptocurrency mining.
- However, according to Core Scientific, Celsius owes them $2 million for the cost of the electricity. Celsius disputes that Core failed to mention in the contract that it would pass on increased electricity prices.
- On October 19, Core requested that a bankruptcy court order Celsius cover all unpaid electricity bills. Additionally, they want the contract between the two businesses to be terminated.
- The impact on the Company’s operating performance and liquidity is due, in part, to the legal issues with the insolvent Celsius Network.
Also Read: Can Crypto Be Hacked?
