Bankrupt miner Core Scientific may sell facilities under development: report
Core Scientific, one of the world’s largest publicly-listed Bitcoin miners, said it may sell some of its mining facilities under development that could be worth up to a gigawatt of power after it filed for Chapter 11 bankruptcy protection on Wednesday, The Block reported, citing the firm’s chief mining officer.
See related article: U.S. crypto miner Core Scientific files for Chapter 11 bankruptcy, continues to mine Bitcoin
Fast facts
The U.S.-based miner said that it will only consider selling facilities under development that were planned to go online in 2023. It doesn’t plan to sell existing mining sites that are worth up to 850 megawatts, according to The Block’s report.
A Core Scientific spokesperson has confirmed the report with Forkast.
The Nasdaq-listed mining company’s shares closed down 75.53% to US$0.051 on Wednesday, a significant drop from US$11.34 a year ago.
Core Scientific’s liquidity crisis comes as low Bitcoin prices and high electricity costs continue to damage Bitcoin miners’ profits.
The company said in a statement on Wednesday that it will “continue to operate its existing self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis.”
In October, Core Scientific warned that it expected to run out of cash resources by the end of this year.
Earlier this week, another troubled U.S.-based miner Greenidge Generation Holdings Inc. entered a debt restructuring agreement with NYDIG, a cryptocurrency service provider to which Greenidge owes US$74 million.
Last month, mining firm Foundry Digital LLC said that it plans to acquire two turnkey mining facilities from embattled miner Compute North.
Carly Wanna and David Pan
Wed, December 21, 2022
(Bloomberg) -- Core Scientific Inc., one of the largest miners of Bitcoin, became the latest crypto company to file for bankruptcy as the industry reckons with a plunge in digital-asset prices.
The Austin, Texas-based company listed $1.4 billion of assets against $1.33 billion of liabilities in its Chapter 11 petition, which was filed in the Southern District of Texas. The company’s shares, already down 98% this year to trade at a fraction of a dollar, lost a further 40% on Wednesday morning.
Chapter 11 bankruptcy allows a company to continue operating while it works out a plan to repay creditors. Core Scientific said in a statement that it intends to reach a restructuring agreement with a group of convertible bondholders and continue operating its mining and hosting business.
The company contributes about 10% of the computing power to secure the entire Bitcoin network. It had 243,000 servers for Bitcoin mining with 143,000 for self-mining. It has provided hosting services to the largest miners in the industry.
In court filings, the company attributed its bankruptcy to falling Bitcoin prices, soaring energy costs and the July bankruptcy of Celsius, one of its largest hosting customers.
The company also over-committed on construction costs to build out its mining operations and owed around $275 million on equipment financing debts that it wasn’t paying significant amounts on before the filing.
Core Scientific is among a handful of Bitcoin mining companies that went public in 2021 through special-purpose acquisition companies before crypto prices fell. However, the “crypto winter” and energy cost hikes have wrecked havoc on the industry, and many major miners now face liquidity crunches.
A slew of crypto companies have sought bankruptcy protection this year as slumping token prices continue to weigh on the sector. Compute North Holdings Inc., a provider of data services for miners and blockchain companies, filed for bankruptcy in September, while Voyager Digital Ltd. sought court protection in July. Sam Bankman-Fried’s FTX exchange filed for bankruptcy in November under a cloud of alleged mismanagement, a move that forced lender BlockFi Inc. to follow suit soon after.
Among Bitcoin miners, Greenidge Generation Holdings Inc., once one of the largest public Bitcoin miners in the US, warned Tuesday that it may seek bankruptcy protection while entering into debt restructuring talks with lender New York Digital Investment Group.
Bankrupt Crypto Miner Soars in Move Reminiscent of Hertz
Matt Turner and David Pan
Thu, December 22, 2022
(Bloomberg) -- Core Scientific Inc. surged by a record 73% on Thursday just a day after the Bitcoin miner became the latest cryptocurrency company to file for bankruptcy.
It’s a move reminiscent of the one seen in Revlon Inc. earlier this year after its own Chapter 11 filing. Retail traders caused similarly confusing spikes of other bankrupt companies in mid-2020 including Hertz Global Holdings Inc. and JCPenney.
“Maybe after seeing the list of creditors and assets on hand, investors could have gained some confidence that there actually will be a positive future,” said Matthew Kimmell, digital asset analyst at crypto investment firm CoinShares. “It is not an FTX situation, where they are heavily weighted in the liability category versus assets.”
The company’s bankruptcy fillings show that it has $1.4 billion assets against about $1.3 billion liabilities and that makes the miner different from most bankrupt crypto firms. US authorities are pursuing a sprawling investigation into the collapse last month of FTX, which was once one of the world’s biggest crypto exchanges.
On Thursday, Core Scientific received permission to access a $37.5 million loan to help fund its bankruptcy. The Bitcoin miner is working on a plan to restructure its debts that would nearly wipe out existing shareholders.
About 544 million Core Scientific shares changed hands, nearly 3,000% more than its daily average over the past three months. But, unlike with Hertz and Revlon, retail investors appeared to be avoiding the frenzy. Roughly 1,000 buy orders were placed on Fidelity’s platform, according to data provided by the firm, markedly lagging demand for true retail-trader favorites.
Even with Thursday’s sudden rally, Core Scientific remains as one of the worst performing stocks in the US for 2022. After starting the year trading at roughly $11 per share, the company has watched its share price crater by 99% year-to-date, trading as low as 5 cents following Wednesday’s bankruptcy announcement.
Austin, Texas-based Core Scientific is the largest Bitcoin miner by computing power and the first major public mining company that has declared bankruptcy. Bitcoin miners raised billions of dollars from debt financing during the last bull run but have struggled to repay debt due to low Bitcoin prices and power cost hikes.
--With assistance from Bailey Lipschultz and Jeremy Hill.
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