Share price of troubled Bitcoin miner Core Scientific rises 200%

by · December 15, 2022

Bitcoin (BTC) miner Core Scientific’s shares have risen nearly 200% in the past four days, following the positive reception of a financing proposal on December 14 from a current creditor who hopes the firm can avoid bankruptcy.

Shares of the struggling miner were at just over 13 cents on December 12, before climbing to nearly 40 cents by the market close on December 15 – representing a 198% gain.

A five-day chart showing Core Scientific’s stock price on the Nasdaq. Source: TradingView

According to financial media firm Marketbeat, traders bought 6,572 call options on December 15, 136% more than the average volume of 2,780, indicating that many are bullish on the stock and betting that the price will continue to rise.

Some members of the Bitcoin community also bought shares, hoping that acquiring shares at current prices could provide a huge return if the financing plan goes through and the firm can survive the bear market.

The rally could be the start of a turnaround, or just a dead cat bounce. Core Scientific was hit by a string of bad news throughout 2022, and despite recent gains, its price is still 95% lower than it was at the start of the year.

On Dec. 14, B. Riley wrote a letter to Core’s shareholders and lenders, outlining a $72 million financing plan that it believes is sufficient to prevent the miner from being forced to file for Chapter 11 bankruptcy.

Should the deal be accepted, the first $40 million will be funded “immediately, with zero contingencies,” while the rest of the funds will be issued if Core agrees to suspend payments to equipment lenders until the price of Bitcoin returns above $18,500 – a price the leading cryptocurrency has been below since November 9.

B. Riley suggests that the funding will provide Core with two years of operating cash, noting that based on their analyst’s forecasts, the miner could generate approximately $165 million in annual revenue at a Bitcoin price of $18,000, with an additional $20 million for each price increase of 1000 dollars.

Related: How difficult has this bear market been for Bitcoin mining? Watch Market Talks on Cointelegraph

Hard hit by the broader market downturn, Core filed a report on October 26 citing a low BTC price, high electricity prices and a refusal by bankrupt lender Celsius to repay a $2.1 million loan as reasons it could default some of its debts.

The bad news continued on November 22, when the miner admitted in a quarterly report that its cash reserves may be depleted by the end of 2022 and it did not believe it would be able to raise funds through financing or capital markets given current market conditions.