Bitcoin miner Core Scientific files for bankruptcy as crypto winter takes toll on crypto mining companies
Core Scientific, one of the largest publicly traded bitcoin mining companies in the U.S., is the latest casualty of the ongoing crypto winter. The company is filing for Chapter 11 bankruptcy protection today in Texas early, according to a report from CNBC, citing a person familiar with the company’s finances.
The stock price of core Scientific has fallen 98% this year alone and the company is struggling to stay afloat as falling crypto prices and rising energy prices made it difficult for the company to break even, making crypto mining a much harder business. Its market value had fallen to $78 million as of the end of trading Tuesday, down from a $4.3 billion valuation in July 2021 when we covered the company after going public through a special purpose acquisition vehicle, or SPAC.
A blank-check company sometimes called a special purpose acquisition company (SPAC), is a shell company that has no operations but plans to go public with the intention of acquiring or merging with a company utilizing the proceeds of the SPAC’s initial public offering (IPO).
Core Scientific is one of the largest providers of blockchain infrastructure and hosting, as well as one of the largest digital asset miners, in North America. It currently has mining operations in North Dakota, North Carolina, Georgia, and Kentucky. So far this year, Core Scientific has minted more than 3,000 bitcoin, including 1,683 for its own account, Levitt said in an interview.
The price of bitcoin has fallen from an all-time high above $69,000 in Nov. 2021, to around $16,800 and that has put pressure on the stock price of Core, which primarily mints bitcoin.
“We’re all sold out. Every bit of infrastructure we can build — and we’re the biggest — we have demand for,” Levitt said. “We’re basically sold out of capacity through 2022, and we’re building more.”
Core Scientific was founded in 2017 by former Myspace CTO and co-founder, Aber Whitcomb. The company provides blockchain and artificial intelligence hosting, transaction processing, and application development. Its platform is used by large-scale partners around the world to deliver reliable solutions that quickly adapt to dynamic market conditions. The company has more than 100 employees, according to its LinkedIn profile page.
We also covered Austin, Texas-based Core last year after its CEO suddenly resigned from the company. Kevin Turner resigned from his role as the CEO after nearly three years running the Bellevue, Washington-based blockchain and artificial intelligence startup. Core Scientific’s co-founder and chairman, Mike Levitt, has stepped in as CEO.
In its October filing, the company revealed that it has operations in three US states including North Dakota, North Carolina, Georgia, and Kentucky. It also added in its filing that “operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs,” as well as “the increase in the global bitcoin network hash rate” — a term used in crypto space to describe the computing power of all miners in the bitcoin network.