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Core Scientific, One of the Largest Bitcoin Miners, Files for Bankruptcy Protection

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Core Scientific (CORZ), one of the largest bitcoin miners by computing power, filed for bankruptcy as the crypto winter continues to take its toll on the industry.

The company filed for Chapter 11 at Southern District of Texas bankruptcy court. The miner’s estimated liabilities are between $1 billion- $10 billion, according to the filing. It has around 1,000-5,000 creditors, with the largest unsecured claim coming from investment bank B. Riley.

The miner’s estimated assets are between $1 billion — $10 billion, according to the filing.

The bankruptcy of Core Scientific, which accounts for about 10% of computing power on the bitcoin network, operating 143,000 mining runs and hosting another 100,000 is the biggest one yet and is set to send shockwaves in an already crumbling industry.

The company first warned of the risk of bankruptcy in late October, and said it wouldn’t be paying some of its loan installments, sending its shares plummeting about 80% on Nasdaq. In November, it reiterated that it may run out of money by the end of this year. The miner has been in talks to restructure its debt and raise capital, which appear to have failed.

Last week, investment bank B. Riley proposed a $72 million financing plan, including $40 million of financing «immediately» and with «zero contingencies.» However, the rest of the funding would be made available once bitcoin hit $18,500. Core Scientific has $42 million outsanding to the bank.

Core Scientific is one of several miners struggling to keep afloat as rising energy prices increase costs, while stubbornly low bitcoin prices slash revenues. Compute North, another major firm in the space, filed for Chapter 11 bankruptcy in late September. The bankruptcy of Core Scientific

Iris Energy (IREN) had to unplug about 72% of its computing power that was tied to just over $100 million of loans that it defaulted on. The loans were held by special-purpose non-recourse vehicles. Argo Blockchain (ARBK). Greenidge Generation (GREE) yesterday announced a debt restructuring deal with its lender NYDIG, but could still run out of cash in two months if it doesn’t secure additional funding.

Core Scientific has also been affected by the bankruptcy of lender Celsius’s mining arm, one of its biggest clients, and lender BlockFi, to which it ows $54 million. Celsius Mining filed for Chapter 11 bankruptcy in July, and in September sued Core Scientific claiming that it violated automatic stay terms. Core Scientific claims Celsius owes it $5.2 million as of Sept. 30. BlockFi filed for Chapter 11 in late November, one of many victims of crypto exchange FTX’s implosion.

Core Scientific was running 243,000 machines in its facilities as of the end of October, split between 14.4 exahash per second (EH/s) of bitcoin self-mining hashrate, and 10 EH/s of hosted machines for other firms, according to the filing. That’s about 10% of the global hashrate, which stands at around 243 EH/s as of the time of writing.

The company went public in Jan. 20 after merging with Power & Digital Infrastructure Acquisition in a special purpose acquisition company (SPAC) transaction.

Read more: Bitcoin Miners’ FTX Contagion Exposure May Amplify Industry Pain

   
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