By George Ward
Core Scientific, a bitcoin miner, has expressed “serious doubt” about its capacity to maintain operations in the coming year due to financial instability.
The company disclosed a total loss of $434.8 million for Q3 2022 in its earnings report, which it submitted to the Securities and Exchange Commission (SEC) of the United States on November 22. Its net losses for 2022 are now at $1.71 billion, following total losses of $862 million in quarter two.
The firm expects its cash resources “would be spent by the end of 2022 or earlier” and will need additional financing to continue its activities until November 2023. Hence, due to its precarious financial situation, there is serious doubt about the company’s capacity to keep operating till the end of the next fiscal year.
Core Scientific said that “doubts and present market circumstances” have diminished the supply of its liquidity sources. This has raised worries about its capacity to fundraise through finance or the stock markets.
There is also “serious doubt” about its capacity to continue functioning because it is “extremely impossible to anticipate when or if the price of Bitcoin will rebound or energy expenses will reduce.”
The company wrote in its filing that a low BTC price, increased electricity costs, and Celsius’s unwillingness to return a $2,100,000 loan are some of the causes Core Scientific’s financial reserves might run out latest by the end of this year,
More Woes For Core Scientific
Core Scientific has reduced operating costs and postponed significant investments to lessen the strain on its finances. However, it is making efforts to increase its hosting income.
Additionally, it has chosen not to redeem its loans to companies to which it is indebted. Strangely, the company admitted that doing so may subject it to legal action for lack of payment and lead to higher interest rates.
Another crypto firm, Argo blockchain, is having a similar issue as Core Scientific. Argo said it is seeking funds through various means.
But it warned that the company would discontinue its operations if it couldn’t raise enough funds.