By Mark Ackman
A group of Core Scientific’s convertible bondholders consulted restructuring lawyers, indicating that the bitcoin mining firm is giving some thought to a potential bankruptcy filing.
A report published on November 1st disclosed that bondholders of Core Scientific had worked with the legal firm known as Paul Hastings.
This occurred after a filing with the US Securities and Exchange Commission (SEC) hinted that the company may be facing financial distress.
The filings
The filing was made with the SEC on October 26th and it showed that the mining firm was unable to fulfill its financial commitments in late October as well as early November.
This was because of the increasing costs of electricity, the low price of Bitcoin, a worldwide rise in the BTC hash rate and the legal issues stemming from its relationship with crypto lender Celsius Network.
In a court filing on October 19th, Core Scientific had claimed that Celsius owed the company post-petition charges of more than $2.1 million.
It further added that it would continue to suffer from losses of $53,000 a day until Celsius met its financial obligations.
Celsius has fired back and said that the deployment of the mining rigs was delayed by Core Scientific and it provided less power than had been agreed in the contract.
The results
After the SEC filing, the share price of Core Scientific took a major hit on Nasdaq, as they suffered losses of a whopping 87%.
At the time of publication, the share price had declined to $0.17 from $1.01. On October 26th, the mining company disclosed that it had 24 BTC and cash of about $26.6 million.
However, it also disclosed that its notes payable as of June 30th stood at $880 million. The company has also not stopped mining bitcoins, as of November 1st.
Financial difficulties
Nonetheless, it is important to note that financial difficulties do not come as a surprise where businesses in the crypto space are concerned nowadays.
As a matter of fact, a number of companies, from lending firms to mining companies, have reported such problems because of the downturn in the crypto market that really began in May.
Based in Minnesota, Compute North is also one of the top mining companies that filed for chapter 11 bankruptcy in the month of September.
According to the company, the financial issues that arose due to the crypto winter and the increase in energy costs resulted in the bankruptcy.
October also saw Argo Blockchain announce that it may also have to cease operations down the road because it is suffering from financial problems.
It was the collapse of the Terra ecosystem that triggered the problems for a number of platforms and things have only continued to get worse.
It started with Three Arrows Capital and then got worse with Celsius Network and Voyager Digital, all filing for bankruptcy one after the other.
As the crypto winter continues, there is a good chance many others will join the mix.