US Crypto Mining Firm Files For Bankruptcy Protection

"); jQuery("#212 h3").html("

Related News Programmes

"); });

2022-12-22 HKT 01:31

Share this story

facebook

  • Core Scientific says the bankruptcy filing was necessitated partly by the prolonged decrease in the price of bitcoin. Photo: AFP

    Core Scientific says the bankruptcy filing was necessitated partly by the prolonged decrease in the price of bitcoin. Photo: AFP

Core Scientific Inc, one of the biggest publicly traded cryptocurrency mining companies in the United States, said on Wednesday it filed for Chapter 11 bankruptcy protection, the latest in a string of failures to hit the sector.

More than a trillion in value has been wiped out from the crypto sector this year on rising interest rates and exacerbating worries of an economic downturn. The slump has eliminated key industry players such as Three Arrows Capital and Celsius Network.

The bigger blow came after major crypto exchange FTX filed for bankruptcy protection last month. Its swift fall has also sparked tough regulatory scrutiny of how crypto firms hold funds and conduct business operations.

Several crypto companies have since been plagued by contagion concerns from the fallout of the FTX collapse, which has quashed hopes of a recovery in prices of digital assets in the near-term.

After rapid growth in 2020 and 2021, bitcoin – the most popular digital currency by far – is down more than 60 percent this year, pressuring the crypto mining sector.

Core Scientific said in a statement the bankruptcy filing was necessitated by a decline in the company's operating performance and liquidity amid the prolonged decrease in the price of bitcoin.

The company's shares have lost roughly 98 percent of their value so far in 2022, shrinking its market cap to about US$78 million. The stock fell another 26 percent in pre-market trading on Wednesday. Shares of other crypto miners including Riot Blockchain, Marathon Digital and Hut 8 Mining Corp have all shed more than 80 percent this year.

Austin, Texas-based Core Scientific said it would not liquidate and would continue to operate normally, as it expects to enter into a restructuring support agreement with its creditors, who represent over 50 percent of the holders of its convertible notes.

Core Scientific said its creditors have also agreed to provide up to US$56 million in debtor-in-possession financing.

One of the largest creditors of Core Scientific, B Riley Financial Inc, had offered US$72 million last week to avoid the bitcoin miner's bankruptcy.

In its bankruptcy petition, Core Scientific said it has US$1 billion to US$10 billion in assets and liabilities, and creditors between 1,000 and 5,000.

Core Scientific went public in 2021 through a merger with a blank-cheque company in a deal that at the time valued the miner at US$4.3 billion. (Reuters)

RECENT NEWS

US Stocks Rise On Hopes Of Pause In Rate Increases

Wall Street stocks finished solidly higher on Thursday, reflecting better sentiment on the US economy and a consensus vi... Read more

China's Financial Risks 'controllable': Regulators

The head of the National Financial Regulatory Administration on Thursday told a high-profile forum in Shanghai that the ... Read more

Banks Cut Yuan Deposit Rates, Could Boost Consumption

China's biggest banks on Thursday said they have lowered interest rates on yuan deposits, in actions that could ease pre... Read more

Cheese And Wine Put EU, Australia Deal In Peril

Australia on Thursday threatened to walk away from a blockbuster free trade deal with the European Union unless its prod... Read more

US Stocks End Mixed As Tech Shares Are Sold Off

Gains by industrial companies lifted the Dow on Wednesday, while weakness among technology shares pushed the Nasdaq deci... Read more

Amazon 'plans Prime Video Streaming Service With Ads'

Amazon.com is planning to launch an advertising-supported tier of its Prime Video streaming service, the Wall Street Jou... Read more