FTX bankruptcy has created a havoc in the crypto space and it’s taking lot of dependencies down with them. Crypto mining companies have faced downhill, particularly if they purchased miners using funds raised during the peak bull run without considering the potential for a bear market.
One such company is Core Scientific, which started as Data Center which eventually ended as Crypto mining company operated in Georgia, Kentucky, North Carolina, North Dakota and Texas. Last week, Core Scientific filed for Chapter 11 bankruptcy protection after they were unable to satisfy the demands of creditors. Here are the key points to note:
- Liabilities are estimated anywhere between $1 – $10 billion
- Filing with SEC shows that Core Scientific has 1,000-5,000 creditors
- The largest unsecured claim appears to be a investment bank B. Riley
- Assets is in the range of $1.4 billion and has approx. 143,000 mining rigs with more in the roadmap
- 10% of the global hashrate was from Core Scientific
- Market capitalization had fallen from $4.3 billion(valuation in July 2021) to $78 million as of end of trading Tuesday
The company hinted possible bankruptcy in the month of October after it was not able to pay to its creditors. This caused the stock to drop more than 75% at that time. As per the company statement from last quarter, Core Scientific was expecting to run out of funds towards end of 2022.
What is the reason behind this bankruptcy ?
Celsius, which filed for Chapter 11, bankruptcy during the month of July was one of its biggest clients to which CoreScientific owes $54 million. Later with BlockFi going down and recently FTX , it all added up which possible put the firm to bankruptcy. Even the bear market with Bitcoin hovering around 16,000 is not helping if miners were bought during the peak of bull run.
It was also noted that, Corer Scientific executives spent more on private jets than Meta ( Facebook) for 2022. So not only Core Scientific went public in 2022, these expenses in their public reports hints more of funds misuse.
As per coindesk report, Core Scientific was running 243,000 machines in its facilities as of the end of October. Thats 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.
Link to SEC
