The mining firm, Core Scientific has attributed its financial troubles to the low price of Bitcoin, electricity expenses, an increase in the BTC hash rate, and a legal dispute with Celsius.
According to reports, Core Scientific, a company that mines bitcoins, is thinking about declaring bankruptcy as some of the holders of its convertible bonds speak with restructuring attorneys. Bloomberg Law reported on Nov. 1 that the Core Scientific bondholders consulted with Paul Hastings after the United States Securities and Exchange Commission received a file that appeared to indicate financial difficulty.
According to the Oct. 26 filing, the mining company was unable to pay its bills in late October and early November due to the low price of Bitcoin (BTC $20,467), growing electricity expenses, an increase in the world’s BTC hash rate, and legal concerns with cryptocurrency lending firm Celsius. In a court document filed on October 19, Core Scientific asserted that Celsius owed the company more than $2.1 million in post-petition fees and that the company would continue to lose nearly $53,000 per day until its debts were satisfied.
Celsius has retorted that the mining company delayed the deployment of its rigs and provided less electricity than necessary in accordance with a prior contract. Following the SEC filing, the price of Core Scientific stock CORZ on Nasdaq dropped more than 87%, from $1.01 to $0.17 at the time of publication. The mining company stated that as of October 26, it had $26.6 million in cash and 24 BTC, but as of June 30, it had $880 million in notes payable. The business has continued to mine BTC as of Nov. 1:
Numerous businesses involved in the cryptocurrency industry, from mining operations to lending businesses, have disclosed financial challenges following the May market drop. Minnesota-based Compute North filed for Chapter 11 bankruptcy in September, citing mounting financial strain brought on by the effects of harsh cold and increased energy prices. In October, Argo Blockchain also disclosed that company could have to stop operating because of a lack of funding.