InfoNesia.xyz – Core scientific, one of the foremost crypto-traded mining companies in the US, announced during its press conference that it might likely go bankrupt due to the vast 97% decline in its bitcoin shares.
This development will also make it impossible for Core scientific (CORZ) to make debt payments for October and November.
Core describes the process as an attempt to explore alternatives and rejuvenate its capital structures and legal facility.
BTIG, an investment bank, said
“We expect this liquidity overhang to prevent CORZ from expanding its hash capacity and delay the company’s ability to secure new hosting customers, which clouds the company’s near-term growth prospects.”
Core Files for Chapter 11 Bankruptcy
Core boss Austin stated during its chapter 11 bankruptcy filing with the bankruptcy court:
“Given the uncertainty regarding the Company’s financial condition, substantial doubt exists about the Company’s ability to continue.”
This latest development came after Core accused the celsius network of its inability to pay up its accrued debt after Core expended over $1.65 million to host Celsius’ mining operation.
On October 19, Core officially filed in a bankruptcy Court; Ron Deutsch, legal counsel to Celsius network, responded to Core’s motion; he said,
“Core Scientific is running over 10,000 bitcoin mining machines for the embattled firm.”
In its suit, Core asks the court to make Celsius either pay up its debts or the contract should be terminated.
Hence, an abrupt shutdown of these machines will affect not only Celsius’s fortunes; but mainly it’s funding for the ongoing legal proceedings.”
Analysts believe Chapter 11 bankruptcy is a real possibility here, especially:
“With the substantial decline in mining rig prices in 2022, we believe there’s a significant chance the creditors holding this debt decide to restructure instead of taking possession of the collateral,” wrote analysts from Compass Point. “Still, without knowing how discussions are going with CORZ’s creditors, we think a scenario where CORZ has to file for Chapter 11 protection has to be taken seriously, especially if BTC prices decline further from current levels.”
However, November has been slated for the final judgment on the matter.
Core’s Scope Of Operation
Before now, you recall that companies like Core, with competitive value propositions, were notorious for taking up debts of big companies with substantial financial expenditures using their mining equipment, facilities, and electricity cost.
However, the current state of the cryptocurrency market has made the company cash-strapped.
Sometime last week, Chris Brendler, a senior equities analyst with D.A. Davidson. Brendler described Core’s position as a from ‘buy’ to ‘neutral’ status. He said: