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One of the largest bitcoin miners files for bankruptcy protection as token prices fall and energy costs rise

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  • Core Scientific filed for bankruptcy protection on Wednesday amid falling crypto prices and high energy costs. 
  • The Nasdaq-listed firm is one of the largest US miners of bitcoin. 
  • The company’s valuation reached as high as $3 billion in April of this year. 

Crypto mining firm Core Scientific filed for bankruptcy protection on Wednesday, the latest digital asset company to fall this year. 

The Texas-based company is one of the largest US miners of bitcoin has been battling broader industry headwinds like the collapse of token prices and steep increases in cost for energy, on which miners rely heavily to solve complex computer equations associated with mining crypto. 

Core said it will keep operating and mining bitcoin while it works on a restructuring plan. Creditors amount to more than 5,000 and the company has between $1 billion and $10 billion in assets and liabilities, according to court documents. 

The company went public in January with the help of a BlackRock-backed special purpose acquisition company, also known as a blank-check company, and saw its valuation soar as high as $3 billion in April of this year. But Nasdaq-listed shares have declined 98% from the start of the year.

The company attributed the bankruptcy filing to “a decline in the company’s operating performance and liquidity suffering from the prolonged decrease in the price of bitcoin, the increase in electricity costs . . . and the failure by certain of its hosting customers to honor their payment obligations.”

Core was further stretched thin by the fall of Celsius Network, a crypto lender which similarly filed for bankruptcy over the summer. Core Scientific provided hosting services to Celsius, and the ensuing dispute has put further financial strain on Core. 

The company has also fallen victim to the mass turmoil felt throughout cryptos this year, driven by aggressive Fed rate hikes and skepticism toward digital assets thanks to bankruptcies from firms like Three Arrows Capital and the world’s second-largest crypto exchange FTX. 

Read the original article on Business Insider
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