Core Scientific Stock Price Plummets 70% as It Considers Bankruptcy

The crypto miner’s board has decided to skip upcoming payments and hire advisers to evaluate the company’s options

article-image

Source: Shutterstock

share

key takeaways

  • Core Scientific’s existing cash resources will be depleted by the end of 2022 or sooner, according to a company filing
  • Research analysts expect the miner’s creditors could agree to restructure the debt, but noted the possibility of bankruptcy “should be taken seriously”

Core Scientific has decided to skip upcoming payments as it faces liquidity and operational issues, and has hired advisers as it considers restructuring its capital structure or seeking relief through bankruptcy.

The crypto miner’s operating performance and liquidity has been “severely impacted” by the lower bitcoin price, litigation with bankrupt crypto lender Celsius Network and the increases in electricity costs and global bitcoin hash rate — and therefore mining difficulty — the company noted in a Wednesday filing

“The board has decided that the company will not make payments coming due in late October and early November 2022 with respect to several of its equipment and other financings, including its two bridge promissory notes,” the filing states. 

The creditors under these debt facilities could elect to accelerate the principal amount of such debt, sue the company for nonpayment or take action with respect to collateral, it adds. Such actions could lead to default of the company’s other debt agreements, including its two series of convertible notes due in 2025. 

Core Scientific has hired Weil, Gotshal & Manges LLP and PJT Partners as advisers. In addition to seeking ways to raise additional capital or restructure its existing capital structure, Core Scientific “could seek relief under the applicable bankruptcy or insolvency laws,” the filing says. 

The company’s stock price was down about 68% on the day, as of 10 am ET.

Compass Point Research & Trading Analysts Chase White and Joe Flynn said in a Thursday research note that it’s hard to predict at this point whether the company will need to file for bankruptcy.

“Given a large portion of its existing debt is equipment financing backed by mining rigs, we believe there’s a good chance [Core Scientific’s] creditors agree to restructure the debt in order to not have to take possession of the rigs, especially in the current market where rig prices have fallen 60%-plus from 2021 highs,” the analysts said. 

Still, White and Flynn added, a scenario where the company has to file for bankruptcy should be taken seriously, especially if bitcoin prices decline further.

The price of bitcoin stood at roughly $20,600 Thursday morning, down roughly 70% from the asset’s all-time high reached last November, but up 13% from its Oct. 13 low of $18,160.

The filing comes after Core Scientific revealed earlier this month that it produced 1,213 bitcoins in September despite severe weather events and electrical equipment manufacturer defects. It expanded its fleet to roughly 232,000 servers, representing about 22.5 exahashes per second (EH/s). 

Though Core Scientific held 1,051 bitcoins and roughly $29.5 million in cash, as of Sept. 30, the Wednesday filing notes that it had 24 bitcoins and about $26.6 million in cash, indicating it sold between about $18 million and $20 million worth of BTC in October.

The company said in the filing it anticipates that existing cash resources will be depleted by the end of 2022 or sooner, adding that it is difficult to predict when bitcoin prices could recover or energy costs could abate.

“Given the uncertainty regarding the Company’s financial condition, substantial doubt exists about the company’s ability to continue as a going concern for a reasonable period of time,” the filing states.

A Core Scientific spokesperson did not immediately return a request for comment.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

kamino cover.jpg

Research

Kamino has solidified its position as the leading money market on Solana and is emerging as a DeFi bluechip. Although DeFi competition is fierce, Kamino has kept iterating on its product to provide the best-in-class UX, paired with a robust risk management framework and battle-tested infrastructure. Given the rollout of Kamino Lend V2, the protocol may scale aggressively over the coming months, penetrating previously untapped markets in Solana DeFi.

article-image

MSTR’s stock price was roughly $248 at 2 pm ET Thursday

article-image

Ever since rates came off zero and fiscal deficits exploded, markets have started paying close attention to how the government is funding itself

article-image

Solana memecoins are collectively at an all-time high

article-image

Optimistic rollups like Optimism, Arbitrum and Base are seeing rapid adoption relative to zk rollups

article-image

Coinbase’s final total for Q3: $331 billion, the equivalent of 15% of the total crypto market cap at the time

article-image

T. Rowe Price’s technology ETF invests in companies across the hardware, software, internet and payments segments