US Cryptocurrency Mining Company Core Scientific Files for Bankruptcy Protection

[Asia Economy New York=Special Correspondent Joselgina] Core Scientific, a major US cryptocurrency mining company, has filed for bankruptcy protection, Bloomberg News reported on the 21st (local time).

Headquartered in Austin, Texas, Core Scientific submitted a bankruptcy protection petition under Chapter 11 of the Bankruptcy Code to a Texas court on the morning of the same day. According to the petition, Core Scientific's debt amounts to $1.33 billion, with assets totaling $1.4 billion.

Core Scientific explained that this bankruptcy filing was due to the decline in Bitcoin prices, soaring energy costs, and the bankruptcy of cryptocurrency lending company Celsius. In particular, it confirmed that it does not have enough cash to repay debts incurred for leased equipment. Additionally, Core Scientific stated that it will not liquidate the company and will continue normal operations through negotiations with creditor groups holding most of the debt.

[Image source=Reuters Yonhap News]

The price of Bitcoin mined by Core Scientific surged to $69,000 per coin in November 2021 but has since plummeted to around $16,000. Meanwhile, the cost of energy required for mining has skyrocketed, worsening profit margins. Furthermore, liquidity crises in the cryptocurrency industry, such as the FTX incident, have dealt a direct blow. Celsius, which filed for bankruptcy in July, is one of Core Scientific's major customers.

Another major cryptocurrency mining company, Greenidge Generation Holdings, is also reportedly facing bankruptcy risk. In a document submitted to the Securities and Exchange Commission (SEC) the previous day, Greenidge Generation Holdings stated that "the board of directors is actively discussing the possibility and timing of a voluntary bankruptcy filing." The company has entered negotiations with lenders for debt restructuring.

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