One of the world’s biggest bitcoin miners, Core Scientific warned that it could file for bankruptcy as its cash resources are depleting due to the numerous pressures the industry is facing.
On Thursday, the company issued a statement to shareholders in which it stated that it was exploring a variety of options.
It further added that it did not intend to pay off its debts which happened to be due in the next couple of days.
The statement from the company said that considering the uncertainty of its financial condition, there was significant doubt about its status as a going concern for a good amount of time.
There was a 70% drop in the shares of the Nasdaq-listed company in early trading after the announcement was made.
According to Core Scientific, the prolonged fall in the price of bitcoin had a severe impact on the company.
Furthermore, electricity costs had gone up, as well as the rise in the bitcoin network hash rate and it also had to face the legal troubles associated with Celsius.
Earlier this month, court documents had shown that bankrupt crypto lender Celsius Network owes Core Scientific millions of dollars for unpaid electricity tariffs.
The miner asserted in the court filing that it is dealing with daily losses of $53,000 because of Celsius’ refusal to pay its dues.
As of Wednesday, the reserves of Core comprised of about $26.6 million in Cash and 24 BTC, which is valued at less than $495,000.
This is considerably less than the reserves of the company a few weeks ago. On September 30th, the company had $29.5 million in cash and 1,051 BTC, which was valued at $21.6 million.
The last few months have seen the company’s bitcoin holdings fall rapidly because it has been forced to sell for meeting its costs.
Core Scientific had had to dump 7,000 bitcoins in July alone for securing its balance sheet. The statement on Thursday morning said that it could not assess its future liquidity requirements.
It said that it could deplete its entire cash reserves by the end of the year or sooner.
Challenges for miners
Miners have been facing the perfect storm because of the combination of the consistently low price of bitcoin, the high costs of energy, and market turmoil.
New data showed earlier this week that competition between bitcoin miners had reached an all-time high, which means more problems for miners.
The price of bitcoin has remained stagnant since mid-June near the $20,000 mark, which means that only those who have the latest rigs are able to break even.
Furthermore, the ability of miners to survive the crypto winter is declining rapidly, with reserves down to a low of 12 years.
If Core does file for bankruptcy, it would certainly not be the only victim of the market turmoil. Compute North, another bitcoin mining data center, filed for bankruptcy last month.
Likewise, Nasdaq-listed mining company Digihost could also be delisted from the stock market because of the massive decline in its stock price.