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Amid the current market scenario and rising energy costs, the company is finding it extremely difficult to continue operations. Core Scientific is also taking help of financial advisors to reorganize its liquidity.
As the Bitcoin price continues to remain under strong selling pressure, miners are finding it increasingly difficult to continue with their operations. Bitcoin mining giant Core Scientific said that they have “substantial doubt” over continuing with the operations past November.
For the third quarter of this year, the miner announced revenue of $162 million, 09% down from the previous quarter. The net loss stood at $434 million compared to the loss of $862 million in the second quarter. In the first nine months of this year, the company has lost a staggering $1.7 billion. During its recent filing with the US Securities and Exchange Commission (SEC), the company said:
“The ability to raise funds through financing and capital market transactions is subject to many risks and uncertainties and current market conditions have reduced the availability of these capital and liquidity sources. Substantial doubt exists about the Company’s ability to continue as a going concern through November 2023.”
Last month in October, the company had already warned that it may run out of cash by the end of the year. As said, the crypto winter of 2022 has negatively impacted the crypto mining industry. On top of this, the rising energy costs have added to further woes.
Core Scientific competitor Compute North has already filed for bankruptcy. On the other, Bitcoin miner Argo is also facing a negative cash flow.
Core Scientific Initiates Key Measures
Core Scientific said that they have initiated a few key measures to cut operational costs. Besides, it is also working on eliminating further construction expenses and reducing other capital expenditures. To improve the liquidity situation at the firm, Core Scientific has also hired law firm Weil Gotshal & Manges and financial advisor PJT Partners. The filing notes:
“The Company and its advisers have begun to engage in discussions with certain of its creditors regarding these initiatives. Among possible alternatives, the Company may explore liability management transactions, including exchanging its existing debt for equity or additional debt, which transactions may be dilutive to holders of the Company’s common stock.”
Furthermore, Core Scientific also aims to pursue asset sales and bankruptcy protection. In terms of computing power, Core is the largest crypto miner in the industry. In addition to being a Bitcoin miner, Core is also a hosting provider for third parties.
A number of law firms are also pursuing class action lawsuits against Core Scientific stating that the Bitcoin miner gave “misleading statements”. The company has nearly $1 billion in debt. Some of its biggest lenders include BlockFi, NYDG, and Anchor Labs.