- Bitcoin mining giant Core Scientific will file for Chapter 11 bankruptcy today
- The Bitcoin mining firm will continue operating while it renegotiates its debts
- Core owns 5% of the global Bitcoin hash rate
Core Scientific, one of the largest bitcoin mining companies, is planning to file for bankruptcy in Texas on Wednesday morning. Core Scientific, which owns about 5% of the global Bitcoin hashrate, plans to continue mining bitcoin during the bankruptcy process, suggesting it believes it can find its way back to solvency. The news marks the first time a publicly listed company in the industry has declared bankruptcy.
Core Scientific Troubles Revealed in November
Core Scientific has been in trouble since early November, when it was revealed that high operational cost and a stagnant Bitcoin price meant it was running at a loss. Core Scientific’s stock has fallen 98% in the past year, in line with other mining companies that have struggled financially amid the bear market.
In late November Core Scientific revealed annual losses of over $1.7 billion, with its last quarterly filings showing a Q3 loss of $434 million. This reversal in its fortunes led to some creditors starting legal proceedings against it, alleging that the company failed to make or return payments.
Bank Suggested Financial Woes Are Self-inflicted
Earlier this month, investment bank B Riley proposed a $72 million financing plan that could have helped Core Scientific avoid bankruptcy. B Riley stated that the majority of Core Scientific’s financial issues are self-inflicted and can be resolved through open communication and cooperation with creditors and equity holders.
Despite having positive cash flow, the company’s income has been impacted by the bear market and is not sufficient to cover the financing costs of its mining operations. Despite the proposed financing plan, Core Scientific has reportedly decided to file for bankruptcy.