One of the largest US-listed bitcoin miners has filed for bankruptcy as companies battle falling token prices and rising costs for the energy-intensive business of churning out cryptocurrencies.
Core Scientific filed for Chapter 11 bankruptcy protection in Texas, where it is based, on Wednesday.
The company said it planned to keep operating and producing bitcoin while it hammered out a restructuring deal with its lenders and creditors.
The Nasdaq-listed crypto miner is a constituent of the Russell 2000 Index, a widely held benchmark of smaller US companies, meaning its bankruptcy will hit the portfolios of many investors as well as deepen the woes of the crypto industry. Its market value reached almost $3bn in April but has since fallen to less than $100mn, according to FactSet data.
The company operated facilities in five US states where computers churn through complex equations in a race against other bitcoin network participants to create new units of the cryptocurrency.
It is one of several listed crypto miners whose stock has been hit as their profits are squeezed between tumbling prices for crypto tokens and rising global prices for the vast amounts of energy burnt in the mining process.
Core Scientific’s stock is down 98 per cent this year.
“The filing of these cases was necessitated by a decline in the company’s operating performance and liquidity suffering from the prolonged decrease in the price of bitcoin [and] the increase in electricity costs necessary to power the company’s data centres,” Core Scientific said in a statement.
The price of bitcoin, the largest cryptocurrency, has fallen more than 65 per cent this year against the dollar, hitting two-year lows.