'Core Scientific,' a Bitcoin miner in the United States, has filed for bankruptcy

Core Scientific, one of the top bitcoin miners registered in the United States, has declared bankruptcy.

On Wednesday, the Texas-based firm declared bankruptcy. The company stated that it will continue to mine bitcoin while negotiating a restructuring agreement with creditors and lenders.

Core Scientific's bankruptcy is yet another huge setback for the crypto business, which has been in difficulties since the beginning of the year. Financial analysts are referring to it as the "crypto winter."

Core Scientific has gone from boom to bust.

Core Scientific was founded in 2017 as a startup. Darin Feinstein, an entrepreneur and venture capitalist, and Aber Whitcomb, a former Myspace chief technology officer (CTO) and co-founder, co-founded the company.

Following a deal with an acquisition firm sponsored by BlackRock, the company began trading in January. The company had locations in five US states where its computers would manufacture fresh bitcoin units.

Core Scientific's stock, on the other hand, has dropped 98 percent this year, and the company has filed for Chapter 11 bankruptcy protection in Texas.

Core Scientific's market value peaked in April at nearly $3 billion, but it has since dropped to around $100 million.

According to a business statement, it is conducting "a complete evaluation of prospective options and exhaustive conversations with various firm stakeholders."

The company plans to negotiate a restructuring support agreement with the Ad Hoc Noteholder Group, which represents more than half of its convertible note holders.

"The filing of these cases was necessitated by a decline in the Company's operating performance and liquidity as a result of the prolonged decrease in the price of bitcoin, the increase in electricity costs necessary to power the Company's data centres, and the failure by [some] of its hosting customers to honour their payment obligations," Core Scientific added.

“In response to these factors, the Company has actively taken steps to decrease monthly costs, delay construction expenses, reduce and delay capital expenditures and increase hosting profitability,” the firm concluded.

Winter of cryptocurrency

After the collapse of stablecoins TerraUSD and LUNA, the price of every major cryptocurrency plunged in the first half of this year. Stablecoins are intended to stabilise the cryptocurrency market by remaining immune to dramatic price fluctuations.

Bitcoin, the market's most major digital currency, has also seen significant value reductions this year. The value of Bitcoin might fluctuate dramatically. It hit an all-time high of $69,045 on November 10, 2021, but now a single bitcoin is worth significantly less, about $16,800.

Greece experienced its own cryptocurrency troubles in November 2021, when Hellenic Coin (HNC), the country's first digital currency, failed.

Recently, cryptocurrency behemoth FTX declared bankruptcy on November 11, 2022. Sam Bankman-Fried, the creator of FTX, was detained in the Bahamas on December 12th and will be extradited to the United States.

Although Core Scientific's bankruptcy may not have the same impact as FTX's, company is part of the Russell 2000 Index, and its demise will influence crypto market investors.

By fLEXI tEAM