Crypto Miner Core Scientific Downsizing After $840M Writedown Fee

Core Scientific (CORZ) cut its headcount by 10% in the second quarter as part of cost-cutting measures to deal with market turmoil, the cryptocurrency miner announced Thursday.

The company posted a quarterly net loss of $861.7 million, including an $840 million charge driven by an asset revaluation and a $150.2 million charge due to a drop in digital asset prices.

“To date, we have eliminated approximately 10% of our workforce — none of which are involved in our data center activities,” CEO Mike Levitt said during the quarterly earnings call.

The job cuts were not part of the miner’s core business, according to CFO Denise Sterling.

Aside from layoffs, the miner said it ended its blockchain technology development business, renegotiated supplier contracts and resized its organization. The company expects that operating costs in the second half of the year will be 25% lower compared to the first half of the year.

Revenue for the quarter rose to $164 million, from $75.3 million at the same time last year, beating average analyst estimates of $161.8 million, according to FactSet. This jump was “primarily driven by increases in digital asset mining revenue and hosting revenue,” the company said.

Core Scientific currently operates 125,000 self-mining servers – miners owned by third parties but hosted by Core. By the end of the year, it expects 170,000 servers to be operational and wants to eventually expand its self-mining fleet beyond that number.

Bitcoin Miner Output and Outlook

The company produced 3,365 bitcoins in the quarter, representing a 4% decrease from the previous quarter. It said current mining output averages 40 bitcoins per day, with a record of 45.7 bitcoins in a single day this week.

Last month, Core sold more bitcoin than it produced to pay for capital investments and maintain liquidity. It also struck a $100 million equity financing deal with investment firm B. Riley Principal Capital amid the market downturn that weighed on the miner’s balance sheet.

The miner has 1,959 bitcoins and a cash balance of $128 million on its balance sheet as of June 30.

Crypto industry insiders expected to see a risk of miner defaults across both public and private miners, as well as hosting facilities, although those risks have eased somewhat with a modest uptick in bitcoin’s price. Bitcoin last traded at $23,937, up nearly 24% in the past month, data from Blockworks Research shows.

In the first quarter, Core lowered its total hashrate outlook to between 30 and 32 exahashes per second, with a total output of around 1 gigawatt.

Hashrate, or the total computational power used to process transactions, is a key metric for bitcoin miners, as it indicates how fast one miner’s machines work in competition with another. Core repeated the same hashrate guidance for the rest of the year.

Rival miner Marathon Digital posted a quarterly net loss of around $192 million, with bitcoin production down 44% from the previous quarter.

Core’s shares are down 70.6% so far this year, but have clawed back losses in the past month. They last traded at $3.24 a share in Friday’s premarket session, TradingView data show.

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