• Core Scientific, one of the largest Bitcoin mining companies, has filed for Chapter 11 bankruptcy protection in Texas.
• The firm attributed the bankruptcy to a $7 million unpaid debt from Celsius Network, slumping crypto prices and rising energy costs for mining.
• Other crypto mining firms such as Argo Blockchain, Iris Energy, and Greenidge Generation are also struggling amid the market downturn.
The crypto industry is no stranger to turmoil, and the latest news of one of the largest Bitcoin mining firms, Core Scientific, filing for bankruptcy further adds to the uncertain situation. The filing, which took place in Texas on Wednesday, reveals that the firm has $1 to $10 billion in assets and liabilities, and has attributed its bankruptcy to a $7 million unpaid debt from Celsius Network, a bankrupt cryptocurrency lending company, slumping crypto prices, and rising energy costs for mining.
Core Scientific is a proof-of-work cryptocurrency mining firm that mines for digital assets such as Bitcoin. This process requires expensive equipment and a lot of electricity, and involves powering data centers across the country, packed with specialized computers that crunch math equations in order to validate transactions and simultaneously create new tokens. The firm went public in mid-2021 through a special purpose acquisition vehicle or SPAC, and achieved a record valuation of $4.3 billion at the time. However, the company’s market capitalization had fallen to just $78 million as of the end of trading on Tuesday, with its stock down by over 98% over the past year.
The crypto winter has been harsh, with over a trillion dollars in value wiped out from the market. Rising interest rates and worries of an economic downturn have further attributed to the slumping prices. Apart from Core Scientific, other crypto mining firms are also facing financial issues, such as Argo Blockchain, Iris Energy, and Greenidge Generation. Even the third-largest crypto exchange in the world, FTX, filed for bankruptcy protection last month and its founder, Sam Bankman-Fried, was arrested and charged with eight criminal charges including wire fraud and conspiracy by the Southern District of New York.
The ongoing crypto winter and its after-effects serve as a reminder to investors to remain cautious and not invest more than they can afford to lose. As the crypto industry moves forward, it is important to keep an eye out for more developments in the crypto space and to stay up-to-date on the latest news and trends.