A prominent Bitcoin (BTC) and crypto mining firm is reportedly filing for Chapter 11 bankruptcy as the bear market takes its toll on the industry.
According to a new report by CNBC, Core Scientific, one of the largest publicly-traded mining companies in the industry, is filing for bankruptcy protection in Texas after its stock plummeted by 98% this year.
However, the company is still reporting possible cash flow and plans to continue operating and repaying its debts without liquidating its assets, an anonymous source familiar with the situation told CNBC.
Core Scientific initially went public in July 2021 through a special purpose acquisition company (SPAC), but soon ran into troubles as its market capitalization fell from $4.3 billion to $78 million, according to the report. The firm is thought to have controlled roughly 10% of the hash rate on the Bitcoin network at its peak.
In October, Core Scientific filed a motion informing its common stockholders that they could suffer a total loss on their investments, largely due to the falling price of BTC, which is now over 75% down from its all-time highs. The company also cited rising overhead costs and ongoing litigation with Celsius, a crypto broker that filed for bankruptcy earlier this year, as reasons for its struggles.
As stated by Core Scientific in the filing,
“As previously disclosed, the Company’s operating performance and liquidity have been severely impacted by the prolonged decrease in the price of Bitcoin, the increase in electricity costs, the increase in the global Bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates.”
Bitcoin is changing hands for $16,823 at time of writing, a fractional dip on the day.
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