Bitcoin mining giant Core Scientific in a filing with US Securities and Exchange Commission informed that they are halting all debt payments.
A leader in blockchain infrastructure – Core Scientific, stated in a filing with SEC that the board has decided that the company will not make payments due in late October and early November.
This is because Core Scientific operating performance and liquidity have been severely impacted by the prolonged decrease in Bitcoin price, the increase in electricity costs, the increase in the global Bitcoin network hash rate, and the litigation with Celsius Networks LLC
Core Scientific anticipates that they may run out of cash resources by the end of 2022 or sooner. The company holds 24 BTC and approximately $26.6 million in cash as of Oct 26. They used to hold over 1,051 BTC and approximately $29.5 million in cash on Sep 30. CORZ opened almost 70% down today.
More Bitcoin Miners Capitulate Like Core Scientific?
According to data from Glassnode, the Bitcoin hashrate is at an all-time high. The increase in the Bitcoin hash rate indicates more competition amongst the miners. The difficulty of mining Bitcoin increases, leading to more power consumption.
Still, Bitcoin price is nearly 70% down from its all-time high in November, decreasing the profitability of miners.
Currently, the Production Cost Floor of Bitcoin is hovering around $17,000. It is the cost that miners incur for producing new Bitcoin. According to Charles Edwards, a crypto market analyst and founder of Capriole Investments, the Production Cost Floor is rising.
This is because the fact that the hash rate is rising, the consumption of power is increasing, and on top of that, the electricity costs are increasing.
Core Scientific, once the largest public miner, has almost been capitulated. The community believes that there is a higher probability of more such stories.
Legal Trouble With the Bankrupt Celsius Network
Core Scientific was in agreement with the bankrupt Celsius Network to provide infrastructure for hosting services. Under the agreement, the machines belong to Celsius, and Celsius benefits from any crypto mining.
Core Scientific has claimed that Celsius owes them $2 million for the electricity cost. Celsius denies stating the reason that Core didn’t say in the agreement that it would pass on rising electricity costs. On Oct 19, Core asked a bankruptcy court to compel Celsius to pay all outstanding electricity costs. They also seek to terminate the agreement between the two companies.
The legal trouble with the bankrupt Celsius Network is one of the reasons for the impact on the Company’s operating performance and liquidity.
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