Troubled Bitcoin Miner Core Scientific on Bankruptcy Risk

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  • Bitcoin miner Core Scientific has issued a bankruptcy warning.
  • BTC’s Difficulty Index is at an all-time high right now.
  • Core has had financial difficulties with litigation with Celsius Networks LLC.

Giant Core Scientific, a major BTC miner, predicted in an article that it would need to sell its own BTC at the end of the year. This is because it would run out of money according to the filing. Shares of mining businesses that are already listed on NASDAQ are now worth 90% less than they were in November 2021. Therefore, many miners are likely to fail to withstand current prices and go bankrupt.

In reality, looking at the BTC Miner Reserve, it hit its pinnacle in September of this year. Notably, this happened when BTC reached a value of 23K and miners sold their BTC and cashed out.

On the other side, the BTC Difficulty Index is at an all-time high right now. The Block Rewards USD is close to where it was in July 2021 when China forbade BTC mining. Thus, the mining industry is becoming more competitive, yet the payouts are inadequate, and the miners are being more squeezed.

In particular, Core, which largely mints bitcoin, has witnessed a decline in the price of the token from an all-time high of around $69,000 in November 2021 to roughly $20,500. The company’s profit margins have been squeezed by that 70% value loss, increased mining competition, and rising energy prices.

The bitcoin miner claimed that its “operating performance and liquidity have been severely impacted. This is as a result of the prolonged decrease in the price of bitcoin. Further, the increase in electricity costs,” as well as “the increase in the global bitcoin network hash rate has harmed it.” Hashrate refers to the combined computing power of all bitcoin miners in the network.

The petition also attributed Core’s financial difficulties to “litigation with Celsius Networks LLC and its affiliates.” Prior to declaring bankruptcy this spring, Celsius was one of the largest names in the cryptocurrency lending industry, with yearly profits of about 19%.

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Godfrey Mwirigi is an enthusiastic crypto writer with an interest in Bitcoin, blockchain, and technical analysis. With a focus on daily market analysis, his research helps traders and investors alike. His particular interest in digital wallets and blockchain aids his audience in their day-to-day endeavors.

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