World’s Largest Bitcoin Miner, Core Scientific’s Stock Falls Over 78% in 24 Hours After Bankruptcy Warnings
- In the last 24 hours, Core Scientific reported a 78% dip in its stock price due to its current financial situation.
- According to the crypto mining giant, it lacks the financial capacity to make its late October and early November debt payments.
- In a statement, Core noted that the price drop of Bitcoin (BTC) and an increase in electricity costs adversely affected its liquidity.
- It has taken numerous steps to save the situation, including selling almost all of its BTC, but it wasn’t enough.
In a filing to the Securities and Exchange Commission on Thursday, Core Scientific, the world’s largest Bitcoin mining firm, warned that it’s on the verge of bankruptcy due to its current financial situation. The report triggered a freefall of the firm’s stock, causing it to dip by 78% in the last 24 hours.
Further, the crypto mining giant submitted that it doesn’t have the financial capacity to make its debt payments that are due for servicing in late October and early November. The ominous situation prompted Core to issue a warning that if things don’t improve, holders of its common stock could forfeit their investment. The company’s financial stability reached rock bottom in 2022 when its stock dropped by 97%.
Causes of the Struggle
Core cited the dip in Bitcoin (BTC) price and the hike in electricity costs as factors that had negatively affected its liquidity and operating performance. Also, the mining firm faulted “litigation with Celsius Networks LLC and its affiliates” for its financial setbacks.
Meanwhile, Core focuses on BTC mining alone, and the asset suffered a massive 70% dip in price by 2022. Recall that Bitcoin fell from its all-time high of $69,000, a figure it recorded in November 2021.
For most of 2022, Bitcoin struggled for price stability, and it currently trades at $20,273.45. The increasing competition among Bitcoin miners hasn’t helped the firm either.
Efforts to Arrest the Situation
Since the commencement of its struggles, Core has taken numerous steps to save the situation. In June, the firm sold almost all of its BTC, yet the intervention wasn’t enough as the company cash reserve went down to $26.6 million. Core has now raised concerns that it could run out of both by the end of the year, or perhaps even before then.
Additionally, Core established that it’s seeking alternative ways of financing its debts. The mining giant said it could sell some of its assets, cut operational costs, and delay some of its construction projects.
Meanwhile, Core said its creditors could file a case against the firm or take action regarding its collateral if it defaults.
On the Flipside
- Although Core Scientific investors might have lost a hefty amount of money, British multinational bank Barclays (BCS) views Core Scientific (CORZ) as one of the best-in-class leveraged plays in the entire crypto ecosystem.
Why You Should Care
Bitcoin prices dropped more than 50% this year, while power prices soared and capital dried up, making the crypto winter challenging for miners. The recent event highlights the bear market’s harsh conditions.
You may also like:
A Substantial Portion of Gen Z and Millennials Prefers Investing in Bitcoin and Crypto: Study
Bitcoin (BTC) Shoots Up 7% After Adidas Cuts Ties with Kanye West
Text source: DailyCoin.com
