Core Scientific, the U.S.’s largest Bitcoin miner by market capitalization and hashrate, filed a SEC filing on Oct. 26, declaring bankruptcy.
Shortly after, the stock went into a steep decline. From $1.02, the stock plunged to $0.22. The stock of CORZ was at its highest point at $10.43 in the start of the year. However, the current price is down 97% for the year.
The news did not affect the Bitcoin price. NewsBTC reports that a Bitcoin miner capitulating is the most serious intra-market threat. However, Core Scientific may be the one to watch for a larger crash.
Bitcoin Miner Core Scientific on The Ropes
According to documents filed with U.S. Securities and Exchange Commission, there are possible bankruptcy proceedings. According to the company, it won’t make debt payments by late October or early November.
In addition, Core Scientific announced that holders of its common stock “could suffer a total loss of their investment.” Cash could be depleted by the end of the year or sooner, in part because Celsius arguably owes the miner $5.4 million.
However, responsible for the Bitcoin miner’s situation, however, according to management, are 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”.
According to CNBC, Compass Point analysts think bankruptcy is possible.
Still, without knowing how discussions are going with CORZ’s creditors, we think a scenario where CORZ has to file for Chapter 11 protection has to be taken seriously, especially if BTC prices decline further from current levels.
The Bitcoin miner currently is looking at various ways to raise additional capital.
Are You Looking for the Bitcoin Price Right Now?
The SEC document gives the all-clear for the Bitcoin price in that a sell-off of Core Scientific’s Bitcoin holdings has already happened. It now has 24 Bitcoins, while 1,027 Bitcoins had been sold in the last month.
In this respect, Core Scientific’s treasury is not more of a concern, but rather the overall bad state of the Bitcoin mining industry. This is due to skyrocketing electricity bills and the low Bitcoin price.
Bigger Bitcoin mining businesses ordered more hardware at a much lower price. They received their machines later than expected due to lengthy delivery times. This was at a time that the price of Bitcoin had been declining.
Compute North (another well-known Bitcoin miner) filed for bankruptcy in September. It owes approximately 200 creditors and up to $500m, according to Bitcoinist.
In the coming months, it will also be revealed if it takes a greater shakeout to expel unprofitable and highly-leveraged miners. Core Scientific’s debt to equity ratio was 3.5x.
The net position shift of miner continues to signal that the mining industry is putting selling pressure on Bitcoin. This metric indicates that miners sold more Bitcoins than they held each day during October.
From a technical perspective, BTC looks ´poised to reach long territory’ soon. The price should not drop below $19.9K at the moment.