The world’s biggest publicly listed bitcoin miner by computing power, Core Scientific (CORZ), announced that it may run out of money before year’s end. At the end of October, the company had $32.2 million in cash on hand, and 62 Bitcoin, worth an estimated $975,000.
The announcement comes on the heels of a bankruptcy warning it issued a month ago, which triggered an 80% drop in its shares on the Nasdaq. At the time, at the end of September, the miner had $29.5 million cash on hand and 1,051 Bitcoin.
Rising energy prices are combining with the plummeting value of Bitcoin and hitting miners hard. Core Scientific is just one of a number of miners struggling to remain operational under current conditions.
Iris Energy was given a notice of default on its loans, and in September, Compute North was forced to file for Chapter 11 bankruptcy. Argo Blockchain (ARBK) and Greenidge Generation (GREE) have also indicated they are in financial difficulty.
In its third-quarter earnings report, Core Scientific said, “We anticipate that existing cash resources will be depleted by the end of 2022 or sooner. Depending on our assumptions regarding the timing and ability to achieve more normalized levels of operating revenue, the estimates of amounts of required liquidity vary significantly. Similarly, it is very difficult to predict when or if bitcoin prices will recover or energy costs will abate.”
In the meantime, the miner is negotiating with creditors in an effort to restructure its debt as it looks to raise additional capital.
In addition, the contagion spreading out from the collapse of cryptocurrency exchange FTX has impacted the miner. One creditor of Core Scientific was BlockFi. FTX had pledged to bail out BlockFi with a $400 million credit facility. However with FTX’s collapse, that will now not happen. Core Scientific owed BlockFi roughly $54 million as of September 30th.
The broader cryptocurrency rout is also hitting the miner’s bottom line. One of Core Scientific’s biggest clients was cryptocurrency lender Celsius’ mining arm. In July Celsius Mining filed for Chapter 11 bankruptcy. In September Celsius Mining sued Core Scientific, alleging it violated automatic stay terms. Core Scientific says Celsius owes it $5.2 million as of September 30th.
Sphere 3D (ANY) and McCarthy Building Companies also filed suit against Core Scientific in November. Meanwhile Core Scientific’s investors filed a class action suit alleging the company has failed to disclose important information to investors.
At quarter’s end, the miner was running 232,000 machines, producing 13 exahash per second (EH/s) of bitcoin self-mining computing power (hashrate), as well as 9.5 EH/s of hosted machines being run for other companies. Overall, that comprises 8.6% of the global hashrate.
