Core Scientific, one of the largest publicly traded cryptocurrency mining companies in the US, has filed for bankruptcy. Despite everything, the company is still generating positive cash flow, so it plans to continue mining bitcoin while paying its debtors.
Core has requested bankruptcy protection contemplated in Chapter 11 in Texas, where it is headquartered, according to 'CNBC'. A movement that has been carried out after a year of falling prices of 'cryptos' and before the increase in energy prices.
Core Scientific is dedicated to mining proof of work cryptocurrencies, such as bitcoin.
Core's market capitalization had fallen to $78 million, from a $4.3 billion valuation it had in July 2021, when the company went public through a special purpose acquisition vehicle, or SPAC. And shares have fallen more than 98% in the last year, as conditions make mining a much more difficult business.
TOTAL LOSS OF INVESTMENT
Last October Core had already warned of the difficult situation it is going through, and said that holders of common shares could suffer a total loss of their investment.
Core also said in October that it would not make payments on its debt, which was due in late October and early November, and said creditors were free to sue the company for non-payment.
The truth is that the company is not going through its best moment. It is mainly dedicated to bitcoin mining, and the price of the token has only fallen since it hit its all-time high, above $69,000, in November 2021. Right now it is trading at $16,800.
Coupled with increased competition among miners and rising energy prices, it has squeezed their profit margins.
Operating performance and liquidity have been severely impacted by the prolonged bitcoin price decline, rising electricity costs, and increasing global hash rate of the bitcoin network.
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