Business is looking up for mining giant Core Scientific, which was on the verge of bankruptcy late last year. Its stock is up more than 400% on the NASDAQ.
Core Scientific gets rid of scavengers
After plummeting 99% in 2022, Core Scientific’s stock value has soared 407% since the start of the year.
There is therefore still a long way to go for this company, which has fished out of optimism and which has found itself taken by the throat in the face of the drop in bitcoin, the rise in electricity and hashrate prices.
But the performance is still remarkable since bitcoin and NASDAQ are progressing more slowly. By 66% and 19% respectively. Especially since the other miners are far from doing as well.
As the chart below shows, all of these miner stocks outperformed NASDAQ and Bitcoin (Core shows the best performance):
The American giant managed around 207,000 minors at the end of March, including 52,000 minors belonging to various customers. That is an impressive hashrate of 16.1 PE/s in its own right. And 21.8 EH/s if we take into account the hosting of third-party ASICs.
Its big mistake was to grow too fast with debt. Offering hosting contracts with fixed electricity costs was also fatal. The biggest miner in the world found himself forced to invoke the ” chapter 11 banking » to plan a reorganization.
How is Core Scientific doing well in 2023? Thanks to the rescue of its shareholders.
Analyst Jaran Mellerud explains:
“Lenders have provided Core Scientific with a predatory (but necessary) emergency loan of up to $75 million. This loan was accompanied by several conditions, the most important being the possibility of converting this debt into shares and ending up with 97% of the total capital of the company, diluting the existing shareholders accordingly. »
Fortunately for shareholders, Core Scientific was able to regain margins thanks to the rise of bitcoin. Margins further thickened by lower electricity prices.
The main lender (B. Riley) has since agreed to new terms. The growing likelihood of a shareholder-friendly restructuring naturally sent their stock values skyrocketing.
Core Scientific’s share is now worth 36 cents, compared to 14 dollars at the end of 2021. There is still a long way to go to catch up with the profitability of its American competitors.
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