%CoreScientific ($CORZ), one of the biggest publicly traded %Cryptocurrency miners in the world, has filed for bankruptcy.
The Austin, Texas-based company filed for Chapter 11 bankruptcy protection from its creditors, citing plummeting cryptocurrency prices and rising energy costs as the reasons it can no longer continue as a going concern.
Core Scientific mines for proof-of-work cryptocurrencies such as %Bitcoin ($BTC). The process involves large data centers across the U.S. that are filled with specialized computers that complete math equations to validate transactions and mint new digital tokens.
The process requires expensive equipment and a lot of energy in the form of electricity, where prices have been steadily rising in 2022.
At the same time, Core Scientific’s market capitalization has declined to $78 million U.S. from a peak valuation of $4.3 billion U.S. in July 2021.
The company’s stock has fallen 98% in 2022 to trade at $0.21 U.S. per share. This drop comes as the price of Bitcoin fell 75% from an all-time high of $68,000 U.S. reached in November 2021.
Core Scientific said it continues to generate positive cashflow, but that its cash is not sufficient to repay the debt owed on the equipment it is leasing.
The company plans to continue operating as normal while reaching deals with its creditors and restructuring its debt.
Core Scientific warned investors this past October that they could suffer “a total loss of their investment” in the company.
Additionally, the company said that its balance sheet has been hurt by the bankruptcy filing this past summer of cryptocurrency lender Celsius. Core Scientific had been a customer of Celsius.
Contagion from multiple bankruptcies continues to ripple across the global crypto sector, especially following the $8 billion U.S. collapse of the %FTX exchange this past November.