The Bitcoin mining company called Core Scientific, filed for Chapter 11 bankruptcy protection in a federal bankruptcy court in the Southern District of Texas early Wednesday morning. The bankruptcy petition, according to the company’s announcement, resulted from a combination of a declining bitcoin price, rising electricity costs needed to power its data centers and “failure by certain of its hosting customers to honor their payment obligations.”
They wrote in their press release about the situation:
“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, the increase in electricity costs necessary to power the Company’s data centers, and the failure by certain of its hosting customers to honor their payment obligations. 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 Company extensively explored potential financing alternatives and actively negotiated with various stakeholders. In consultation with its advisors, the Special Committee of the Board of Directors of the Company determined that the restructuring contemplated by the Restructuring Support Agreement represents the optimal path forward and best positions the Company for long-term success.”
Who is Bitcoin Core Scientific?
According to their website, Core Scientific is a publicly traded bitcoin mining company. Their services include data center construction, hosting, and consulting. They also produce the open source software used by many other bitcoin mining companies. The company said that it will work to “resolve all pending debts” and “look for new opportunities.” Core Scientific also warned its customers not to use its services until further notice, as there is a “risk of exposure to liabilities not currently known or estimable.”
It’s also worth noting the company was also entangled in the ongoing bankruptcies of Celsius and BlockFi, which stems from the FTX exchange fraud headed up by Sam Bankman-Fried. After the FTX fiasco and dealing with centralized crypto exchanges, some might grab a cup of coffee and just sit back and say fuck the exchanges at this point!
What is Bitcoin mining?
Bitcoins are created by mining, which involves solving complex algorithms. The process of mining is called “mining” because the rewards for doing so are distributed among those who contribute the processing power used to solve the algorithms in return for coins (or fractions thereof).