Creditors seek legal advice on Bitcoin Miner
Bitcoin Miner Core Scientific is in financial distress and may miss payments due in November. Bankruptcy may also be considered.
Bitcoin miner Core Scientific is reportedly exploring bankruptcy as it undergoes financial problems. As a result, creditors work with a law firm to explore their options. Bloomberg first reported the news, citing sources close to the matter.
Core Scientific cannot meet payments
Core Scientific, one of the world’s largest Bitcoin miners, said last week that it would not be able to meet its payments in October and November. This has spurred a group of convertible bondholders to talk to restructuring lawyers.
Bloomberg reports that Core Scientific has approximately 24 Bitcoin and $26.6 million in cash. The company’s stock value has fallen by over 80% in the past five days, down to $0.18 per share. It went public earlier this year when it went through a merger.
The fall in Bitcoin’s value in 2022 has hit many in the market hard, and miners in particular have suffered. Energy costs have also increased, adding to the woes of a once lucrative segment of the market.
These companies have found it difficult to raise liquidity in the midst of the crypto winter. If Core Scientific goes under, there would be another high-profile entity to do so. It has also dropped Ernst and Young as external auditor.
BTC miners are using new strategies
Core Scientific is not the only mining company in trouble. The industry is experiencing a shift in how they do business as low prices hit their business hard.
BitMine Immersion Technologies entered into a line of credit with Innovative Digital Investors Emerging Technology valued at $1 million. This will be used to buy equipment for operations and associated working capital. It is also shifting its primary business to self-recovery.
Meanwhile, Argo Blockchain saw its shares fall by about 40% when a $27 million fundraising failed to materialize. The company said that if it failed to secure additional financing, it would become cash-flow negative or have to reduce or cease operations.
BTC miners experiencing high stress
Mining pools like Poolin are also suffering from a liquidity crisis. In September, it announced it was suspending withdrawals, flash trades and internal transfers because of this. The hash rate has dropped, which also took a toll on mining revenue.
The general loose in hash rates and increasing prices are the main reasons behind miners’ stress. Mining reserves are at a 12-year low, down to just 1.91 million BTC. Miners sell around 8,000 Bitcoin a month to cover expenses, according to Glassnode.
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