The world’s largest bitcoin miner has filed for bankruptcy. Core Scientific is paying dearly for its delusions of grandeur.
Turnaround
In letter to shareholders as well as to the lenders, the first of them, Riley Financial, declared on December 14 that a “Bankruptcy of Core Scientific was not necessary at all” :
“In our view, the vast majority of Core Scientific’s problems can be corrected through open, transparent discussion and continued engagement with its creditors and shareholders. To that end, Riley Financial has approached Core Scientific’s board of directors to provide it with $72 million in new funding. »
This extension was to be sufficient to provide more than two years of leeway to allow time for the company to become profitable.
But you have to believe that the “favorable conditions” of this new loan did not satisfy the managers of Core Scientific who preferred to file for bankruptcy. The financial hole is between a billion and 10 billion dollars.
The Argo companies and greenidge are next on the list if the price of bitcoin does not go up. Hosting provider Compute North went out of business in September.
Soon a cut sale?
According to Riley Financial, Core Scientific’s equipment is worth about $300 million. But this is not enough for this form whose positive cash flow is not enough to repay creditors.
Core Scientific was mining on its own 50 bitcoins per day thanks to its 130,000 machines. That is a power of 13 million TH/s. The company planned in October to deploy 38,000 more machines before the end of the year.
Thirty other BTCs were mined through its hosting business. That is 102,000 machines representing 9.5 million TH/s which will have to be redeployed elsewhere.
After the great exodus from China to the United States, yours truly thinks that many machines could this time land in Russia, which is already a mining heavyweight.
Core scientific representing 10% of the global hashrate, its cessation of activity will see its competitors share the 80 BTC mined each day by Core. Many miners are rubbing their hands…
Not to mention the hundreds of thousands of machines that will flood the second-hand market.
The scissor effect that pinches miners
The prices of mining machines have fallen sharply. The balances reach more than 80% on the latest machines. Logical in view of the decline in profitability linked to three main factors:
- The fall in the price of bitcoin. The latter is down around 70% since the November 2021 record;
- The increase in hashrate. Increased competition inevitably translates into lower revenues;
- The energy crisis. Miners who have made the mistake of plugging into fossil energy sources are biting their fingers.
Today an old Antminer S9 has need electricity at less than 0.03 dollar per kWh to be profitable. S19 models need electricity under 0.07 dollars and the best S19XP models only make money below 12 cents.
This bear market is starting to take a long time and other miners could find themselves on the floor in the coming months if bitcoin does not regain a little altitude.
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of daily and weekly so you don’t miss any of the essential Tremplin.io!
