The biggest Bitcoin (BTC) miner on the planet, Core Scientific (CORZ), issued a warning that if its financial situation does not change, it may have to consider bankruptcy, sending its shares soaring 70% in pre-market trade.
The miner stated that it expects the year’s cash resources to run out before the end, probably earlier. A filing of October 27 noted that “substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time.”
The miner is looking into a variety of tactical options for collecting extra money. It has retained PJT Partners LP as a financial adviser and Weil, Gotshal & Manges LLP as legal counsel.
According to Core Scientific, if the potential capital raise strategies do not work, the company might have to seek bankruptcy protection. In relation to some of its equipment and other financings, the company will not make the payments expected in the coming days of this month nor the beginning of the other, it stated in a filing on October 27. According to the statement, creditors may choose to sue the business for not paying or pursue action in relation to collateral.
The company is looking into a number of measures to make up for the loss, including hiring advisors, raising more money, or reorganizing its current financial structure. The difficulties faced by Core Scientific are a reflection of the depressed situation of the Bitcoin (BTC) mining sector, where businesses are constrained by high cost of electricity and a flat Bitcoin (BTC) value. Compute North, a competitor of Core Scientific, declared bankruptcy in September after owing up to $500 million to 200 creditors, if not more.
In November 2021, the price of Bitcoin (BTC) reached an ATH of about $70,000. The biggest crypto in the world has since declined, falling to less than $20,000 in June 2022. Ever since, it has obstinately remained around the $20,000 mark, making it difficult for miners to make it in the industry.