Bitcoin miner Core Scientific lost $1.7 billion in 2022, saw bankruptcy risks

Core Scientific, the largest US mining company in terms of computing power, revealed its loss for the first nine months of the year reached over $1.7 billion. The firm posts a $435 million loss in Q3 amid bankruptcy looms.

The Texas-based Bitcoin mining company is one of the hardest hit miners, with low Bitcoin prices depressing mining revenue to a record low. Soaring energy costs and more competition among miners have plummeted profit margins, Bloomberg reported.

Back in October, Core Scientific first warned that it might have to file for bankruptcy if the company can’t find more funding to repay its debt, which amounts to over $1 billion. According to the company’s third quarter report, it had a loss of $434 million, compared to $862 million in the previous one.

The company anticipates that existing cash resources will be depleted by the end of 2022 or sooner and failed to repay some of its debt in October. Core Scientific will potentially seek relief under the applicable bankruptcy laws. The insolvency could have a broad impact on the mining industry given the company’s scale.

Core Scientific says it has taken steps to cut operating costs, eliminate and delay construction expenses, and reduce and delay capital expenditures, while it also attempts to increase hosting revenue. It has hired law firm Weil Gotshal & Manges and financial advisor PJT Partners to help find alternatives to improve liquidity.

It may also pursue additional financing, asset sales or bankruptcy protection. Core is by far the largest company in the industry by computing power. It is both a hosting provider for third parties and a bitcoin miner itself.

The miner recognized that it has opened itself to a host of lawsuits. A number of law firms are now pursuing class action lawsuits, including Johnson Fistel and Schall Law Firm, which both claim that Core made “misleading statements” to the market. It is also involved in a legal dispute with the mining arm of bankrupt Celsius over claims of missed payments.

Core Scientific contributes to nearly 10% of the computing power to secure the entire Bitcoin network by validating transaction data and earning rewards in the token. It has 243,000 servers and more than 40% of them are in hosting agreements, where Core Scientific provides data center space and related services to run mining machines for its clients including other large-scale miners that do not have their own hosting sites.