What many suspected after the news broke in late October has now become a reality. One of the largest publicly traded Bitcoin mining companies in the U.S., Core Scientific Inc. (CORZ), has filed for Chapter 11 bankruptcy, CNBC reported today. The network cites an anonymous source.
Whether the Bitcoin mining company will survive the crypto winter, however, remains to be seen. CORZ is still generating cash flow, but it is not enough to pay off the financing debt from the machine lease.
Therefore, the company will not be liquidated for the time being, but will try to continue operating as usual while reaching an agreement with the holders of senior promissory bills, who hold the majority of the company’s debt, a person familiar with the matter told the media group. Core Scientific produced a whopping 1,077 Bitcoins in the month of January, as was revealed at the beginning of the year.
However, in late October, the Bitcoin mining powerhouse disclosed that the drop in price and rising competition due to the massive growth in the hash rate had torn cracks in the company’s books.
Austin, Texas-based Core Scientific issued an announcement that the company could run out of money by the end of the year and may file for bankruptcy protection. The situation has seemingly not improved since then, especially as the Bitcoin price continued to plummet following the FTX collapse.
The market capitalization of CORZ, which went public through a special purpose acquisition vehicle (SPAC), had fallen to $78 million by Tuesday’s close of trading. CORZ peaked in July 2021, when the Bitcoin miner had a valuation of $4.3 billion. Overall, the stock has plummeted a staggering 97.7% in the last year.
What Impact Will The Bankruptcy Have On Bitcoin?
The impact on Bitcoin is likely to be limited for now. While Core Scientific still owns about 5% of the global hashrate, the company said it will continue to operate as normal. Just yesterday, the mining company reported that it mined 47.7 BTC on December 19 (within 24 hours). Therefore, a collapse in the hash rate is not expected.
Today’s $CORZ daily self-mined #Bitcoin for the last reported 24-hour period (19-Dec-2022): 47.7 pic.twitter.com/MicVbaKguw
— Core Scientific (@Core_Scientific) December 20, 2022
Possible effects on the Bitcoin price are also not on the cards. Even before the October warning, Core Scientific had already sold a large part of its Bitcoin holdings. At the end of October, it was revealed that Core Scientific held only 24 BTC and $26.6 million in cash. So a “colossal” BTC dump will not occur.
At press time, the BTC price was trading at $16,859, trying to break crucial resistance at $16,900. The price needs to overcome the $16,900 level to generate further upside momentum. Yesterday, BTC had temporarily climbed to $17,054, but could not permanently turn this resistance level into support.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments