Bitcoin miner Core Scientific’s share price plunges 70% after bankruptcy warning

Core Scientific, one of the world’s largest Bitcoin miners, have said they may declare bankruptcy as the myriad pressures facing the industry drain cash resources.

In a statement sent to shareholders on Thursday morning, the company said it was exploring a number of options and that it would not pay any of its debts in the coming days.

“Given the uncertainty regarding the company’s financial position, substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time.”

Shares in the Nasdaq-listed business fell 70% in early trading, following the announcement.

Core Scientific said it has been “severely affected by the prolonged decline in the price of bitcoin, the increase in electricity costs, the increase in the hash rate of the global bitcoin network and the trial with Celsius.”

Bankrupt crypto lender Celsius owes Core millions of dollars in unpaid electricity bills, following legal documents documents submitted earlier this month. The miner said in the lawsuit that it is losing about $53,000 a day to cover what Celsius has refused to pay.

As of Wednesday, Core had 24 BTC (just under $495,000 at today’s prices) and roughly $26.6 million in cash, a much depleted reserve compared to just a few weeks earlier on September 30 when it had 1,051 BTC ($21, 6 million) and $29.5 million.

The amount of Bitcoin the firm has on hand has fallen rapidly in recent months, as it has been forced to unloading more than was mined to cover the costs. In July, the company dumped over 7,000 BTC in an attempt to shore up its balance sheet.

“It is very difficult to estimate our future liquidity needs,” the statement said Thursday morning. “The company expects that existing cash resources will be exhausted by the end of 2022 or earlier.”

Challenges for miners

The persistently low price of Bitcoin has coincided with high energy costs and market turmoil to cause a perfect storm of pressure on miners.

Earlier this week, new data showed that competition among Bitcoin miners had hit a new all-time high, adding more woe to miners.

With Bitcoin’s price still stagnant around the $20,000 mark, as it has been since mid-June, this means that only those with the latest kit are able to break even.

And miners’ ability to ride out the crypto winter is now dwindling, with reserves at one Minimum 12 years.

Core would not be the first victim of the industry turmoil. Last month Bitcoin mining data center company Compute North filed for bankruptcywhile fellow Nasdaq-listed miner Digihost is is facing a possible delisting from the stock market after a large fall in the share price.

Many companies in the sector are now explore other activitiesincluding some outside the blockchain world, to stay afloat.