By Richard Hines
One of the globally recognized Bitcoin mining companies Core Scientific has notified that it may soon be drained of funds and may eventually file for bankruptcy protection by the end of 2022.
Core Scientific Hit By Market Downturn
It is no news that BTC, which is the world’s largest cryptocurrency by market cap, amongst others has experienced an intense downturn in its value this year. This has made profit maximization quite difficult for those in the mining industry.
Also, the increased cost of electricity has adversely impacted the industry, Core Scientific explained in its October 27th filing with the United States Securities and Exchange Commission (SEC).
The company had also included its lawsuit against digital currency loan protocol Celsius Network. Core Scientific claims that Celsius has halted its bill payment since after the Chapter 11 insolvency it filed for itself, causing a monetary strain for the mining company.
Blockchain-based data provider Glassnode had clarified that Hash Rate of BTC had attained its lowest level, which is of $66,500 per Exahash. This simply illustrates that bitcoin miners are making very low income when compared to hash power causing a serious economic drain for the industry.
Arcane Research recently released a documentation noting that miners’ earnings have plunged by 81% from the highest point reached in the past October. Many miners have watched their total revenue decrease from the 80%-90% point to 30%-40%.
Miners have experienced the intense struggle attached to high cost of energy causing a drop in the number of mining participants in the European mining industry, the documentation further explained. American miners are not left out in the struggle, it added, highlighting that power prices will continue to increase as the cost of natural gas rises.
Long-Term Bitcoin Hodlers Versus Miners
Long term bitcoin hodlers have so far held on strong despite the “all-time-low” hit.
Bloomberg data reviewer Mike McGlone noted that BTC is currently making its way into an “unstoppable maturation stage.” This justifies his belief that the coin’s value will persistently increase notwithstanding the Federal Reserve rate hike that comes up next month.
Bitcoin’s current trading rate is $20,582 with a market cap of about $395 billion as of the time of writing.