One of the world’s biggest Bitcoin, BTC, miners, Core Scientific, indicated that it could declare bankruptcy due to depleting cash resources. The reason behind its decreasing cash resources is the industry’s myriad pressures. On the 27th of October, in a statement issued to shareholders, Core Scientific said it was exploring several options. The company indicated it would not pay any of its due debts over the next few days.
In the statement, the company showed that given its financial condition uncertainty, substantial doubt exists about its ability to continue as a going concern for a reasonable duration. After the company’s announcement, their shares in the Nasdaq-listed business were down 70% in early trading.
Core Scientific also showed why it had been severely impacted by the prolonged. The reasons are the decrease in the price of bitcoin, the increase in the global bitcoin network hash rate, the rise in electricity costs, and litigation with Celsius.
According to court documents filed earlier this month, Celsius, now a bankrupt crypto lender, owes Core millions of dollars in unpaid electricity tariffs. In the court filing, Core Scientific said it was losing about $53,000 per day to recover what Celsius has refused to pay.
On the 26th of October, the company had 24 BTC and approximately $26.6 million in cash, which was a much-depleted reserve. While on the 30th of September, it had 1,051 BTC and $29.5 million in reserves.
In the past few months, Core Scientific Bitcoin holdings decreased rapidly. The reason behind this rapid decrease was more offload to meet costs. For example, the company dropped over 7,000 BTC in July, which it did to shore up its balance sheet.
In the statement, the company said it was very difficult to estimate its future liquidity requirements. They also indicated their remaining resources, as the company said they anticipated that existing cash resources would be depleted by the end of 2022. These challenges and depletion of resources led Core Scientific to think about the declaration of bankruptcy.