Core Scientific, one of the largest Bitcoin Mining firms in America, has recorded a loss of $1.7 billion in 2022 alone which could lead to possible bankruptcy. The Texas-based firm started in 2017 to build infrastructure technology for bitcoin and other blockchain-related technology.
According to the report, after a third-quarter loss of $434 million, the company sent its first notice of possible bankruptcy in October 2022 as its debt rose to over $1 billion. The company, with over 100 employees and runs 100% net carbon-neutral operations, has been hit by the low price posted by Bitcoin in months, competition from other mining firms, and an increase in energy costs.
Core Scientific had 8,000 Bitcoin at the beginning of 2022, but all of these was reduced to 62 Bitcoin and $32 million in cash as of November. The effect of the market crash brought about the company selling most of its Bitcoin to pay most of its debt which has also made it impossible to raise more liquidity from investors who don’t trust the market.
Shares down by 99%
From the start of 2022 until date, the price of the company’s shares has dropped by 99% while the team explained that its current “cash resources will be depleted by the end of 2022 or sooner”. It was reported that the company couldn’t pay its debt for the month of October due to the situation at hand.
Signs are showing that the closure of Core Scientific will affect the Bitcoin mining industry as the company contributes about 10% of the computing power used to secure the entire Bitcoin network. With 243,000 servers under the company’s broad network, Core Scientific provides mining related services, including data center space for large mining firms.
While all of this is going on, some of its clients have filed court cases against the firm as they have not received their payment in the third quarter.