Core Scientific Stock (NASDAQ: CORZ) crashes after filing for Chapter 11 bankruptcy

LAGOS (CoinChapter.com) — Core Scientific, one of the biggest publicly traded cryptocurrency mining companies in the United States, has filed for Chapter 11 bankruptcy protection due to the recent downtrend in the sector.

In detail, Core Scientific filed for Chapter 11 at the Southern District of Texas bankruptcy court, becoming the latest in a string of failures that recently hit the crypto sector.

Notably, the move development comes from plunging cryptocurrency prices and rising energy costs this year. The Texas-based mining company, in a statement, said it would not liquidate and would continue to operate normally.

The company, one of the largest publicly-traded producers of bitcoin (BTC-USD), is one of several miners struggling to keep afloat. The company is still generating positive cash flow, but that cash is insufficient to settle its debt.

According to a source familiar with the company’s situation, the company could not repay its late Oct. and early Nov. debt. However, the company will not liquidate but will continue to operate normally while reaching a deal with senior note holders.

Core Scientific Stock (NASDAQ: CORZ) Slumps 75%

Following its decision to file for bankruptcy protection, Core Scientific (NASDAQ: CORZ) stock plunged 75% in Wednesday’s premarket trading.

According to data from Yahoo Finance, the mining company stock is down 60% so far this month. In particular, Core is one of the worst-performing stocks this year, with its share’s year-to-date performance down by 99%.

Core Scientific’s market capitalization had also fallen to $78 million as of the end of trading Tuesday. The miner market cap dropped from a $4.3 billion valuation in July 2021 when the company went public.

Notably, the company went public on Jan. 20 after merging with Power and Digital Infrastructure Acquisition in a special purpose acquisition company (SPAC) transaction.

Creditors To Provide Debtor-In-Possession Financing

Meanwhile, Core Scientific, in a court filing, said it had suffered a net loss of $434.8 million for the three months ending Sep. 30, and it had just $4 million in liquidity at the time of its bankruptcy filing.

According to the filing, the miner’s estimated liabilities are between $1 billion-$10 billion. It has around 1,000-5,000 creditors, with the largest unsecured claim coming from investment bank B. Riley.

Riley proposed a $72 million financing plan, including $40 million of financing immediately and with zero contingencies. However, the rest of the funding would be available once Bitcoin hits $18,500. Core Scientific has $42 million outstanding to the bank.

Core’s bankruptcy is the biggest one yet and is set to send shockwaves in an already crumbling industry. The company boasts about 10% of computing power on the Bitcoin network, operating 143,000 mining rigs and hosting another 100,000.

Other Crypto Miners Stock Plummet

It is also important to note that other mining companies face similar difficulties as Core Scientific. For example, compute North, another major firm in the space, filed for Chapter 11 bankruptcy in late September.

Similarly, Greenidge Generation announced a debt restructuring deal with its lender, NYDIG but could still run out of cash in two months if it doesn’t secure additional funding. Iris Energy (IREN) and Argo Blockchain (ARBK) are battling financial issues.

Moreover, shares of several crypto miners, including Riot Blockchain (RIOT.O), Marathon Digital (MARA.O), and Hut 8 Mining Corp, have plummeted.