Core Scientific's share price crashes by 70 % because bankruptcy is considered
Core Scientific's share price crashes by 70 % because bankruptcy is considered
- The existing cash from Core Scientific will be used up by the end of 2022 or earlier
- Research analysts expect the creditors of the miner to agree to restructuring the debts, but found that the possibility of bankruptcy should be "taken seriously".
Core Scientific has decided to suspend upcoming payments because it is faced with liquidity and operating problems, and has set consultants because it is considering restructuring of its capital structure or striving for discharge through bankruptcy.
The operating performance and liquidity of the crypto miner was "severely impaired" by the lower Bitcoin price, the legal dispute with the bankruptcy crypto loan Celsius Network and the increase in electricity costs and the global Bitcoin-Hash rate-and thus by the mining difficulties, as the company stated .
"The board decided that the company will not make the payments due at the end of October and early November 2022 in relation to several of its equipment and other financing, including its two bridge cuddles," says the submission.
The creditors in the context of these credit facilities could decide to accelerate the capital amount of these debts to sue the company for non -payment or to take measures in relation to collateral. Such measures could lead to the failure of the company's other debt agreements, including its two series of converted bonds, which are due in 2025.
Core Scientific has been involved in Weil, Gothshal & Manges LLP and PJT Partners as consultants. Core Scientific is not only looking for opportunities to obtain additional capital or to restructure its existing capital structure, but "could apply for relief in accordance with the applicable bankruptcy or bankruptcy laws," says the submission.
The company's share price had fallen by about 68 % on this day at 10:00 a.m.
The Compass Point Research & Trading Analysten Chase White and Joe Flynn said in a Research Note on Thursday that it is difficult to predict whether the company has to register bankruptcy.
"In view of the fact that a large part of the existing debts consists of equipment financing, which are secured by mining platforms, we believe that there are good opportunities [Core Scientific’s] The creditors are ready to restructure the debts so that the drilling islands do not have to own, especially in the current market, where the prices for the highest rates from 2021 Over 60 % have fallen, ”said the analysts.
Nevertheless, added White and Flynn, a scenario in which the company has to register bankruptcy should be taken seriously, especially if Bitcoin prices continue to drop.
The price of Bitcoin was around $ 20,600 on Thursday morning, which corresponds to a decline of about 70 % compared to the all -time high of the asset from last November, but an increase of 13 % compared to its low of October 13 from $ 18,160
The submission takes place according to Core Scientific at the beginning of this month that it reveals in September despite streaking and manufacturer's facts 1.213 Bitcoins produced. It expanded its fleet to around 232,000 servers, which corresponds to about 22.5 exahashes per second (EH/S).
Although Core Scientific held 1,051 bitcoins and about $ 29.5 million in cash on September 30, the message submitted on Wednesday notes that it had 24 bitcoins and about $ 26.6 million in cash, which indicates that it sold BTC worth around $ 18 to $ 20 million in October.
The company said in the submission that it was assumed that the existing cash will be exhausted by the end of 2022 or earlier, and added that it was difficult to predict when the Bitcoin prices could recover or the energy costs.
"In view of the uncertainty regarding the company's financial situation, there are considerable doubts about the company's ability to continue his business over a reasonable period of time," says the submission.
A spokesman for Core Scientific did not immediately answer a request for comment.
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The share price according to Core Scientific crashes by 70 % because it is considering bankruptcy, there is no financial advice.
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