Largest public traded Bitcoin miner- Core Scientific in critical condition

[udayantha11]

As per the news everywhere.

Largest public traded bitcoin mining company in USA became huge loss.  Unable to pay debts and move to bankruptcy. So this might be a warning that cost of the mining unable to cover from the current BTC price.

world economy is in a danger. specially Proof of work BTC needs high electricity power to run hash. this might be warning to other mining plants across the world.

Specially , unnecessary cost needs to cut down, not go for high end renovations , pay the creditors on time and debt restructure accordantly. 

[DapanasFruit]

I am hoping that you also published some reference for this news which actually can be bad particularly for Core Scientific and Bitcoin in general. For sure, there are some factors for the insolvency of this company specifically happening on the said platform that may not be true with other crypto miners. However, am just wondering what can happen if most of these miners will be suffering losses and will gradually cease doing business...or is this concern not founded on facts?

[franky1]

the cost of mining is not equal

the electric prices /kwh range from $0.04 to $0.45

there are some places in america which were mining using higher electric cost then the base level but doing so as a gamble/promise
this is where they would get 2 investment companies.. one to pay the electric one to pay the hardware.. and both then get back Xbtc per block solve with the hope that the market price would have moved up sooner

this does not mean all mining is unprofitable.
this means a positive

the cost over all is increasing meaning those mining are going to stop selling coin so cheap. which as we seen in recent days meant that the price of the bitcoin market moves up

for those already with mining costs above the market price they become BUYERS because its cheaper to buy btc than mine it

this flip to buyer status help bring up the market price along with the lack of sellers able/willing to sell cheaper

[bbc.reporter]

Glassnode made an analysis on both bullish and bearish cases in one of their weekly newsletters for October. Everyone can read the full analysis in the source of this summary.

One of the bearish cases is on the miners' profitability and the increasing hashrate. It is certainly clear that one of the 2 should occur. Price pump or miner capitulation. However, there is also a third possibility which has already started. Jihan Wu, Changpeng Zhao and Justin Sun offer the cashflow to bail out the miners.



The mining industry has been in the spotlight of late, with hashrate and difficulty pushing to new all-time-highs (covered in WoC 40). This acts to increase the cost of BTC production, despite miner revenues per hash falling to all-time lows.

The Difficulty Regression Model is an estimated all-in-average cost of production, and is coincident with the spot price of $19.3k at the time of writing. A bearish cross-over was last seen in mid-2018, with a major mining industry capitulation following soon after, and persisting for several months.

Indeed, the mining Hash Price has reached all-time-lows this week, with miners earning just $66.5k/day per Exahash applied. With Hash Price now falling below the post 2020 halving lows, despite coin prices being ~2x, this demonstrates just how extreme the recent increase in hashrate competition has become.

Overall, the Bitcoin demand side, as measured by on-chain activity and network participation, is lacklustre to say the least. There are some green shoots of hope in the mempool, however there remains a $1.5B overhang of coins held by the mining cohort, whom are in extremely distressed territory.

A deleveraging event of miners may lead to distribution into thin orderbooks (WoC 42), historically light demand, and persistent macroeconomic uncertainty and liquidity constraints.

Source https://insights.glassnode.com/the-week-onchain-week-43-2022/

[Aanuoluwatofunmi]

Largest public traded bitcoin mining company in USA became huge loss.  Unable to pay debts and move to bankruptcy. So this might be a warning that cost of the mining unable to cover from the current BTC price.

Doing business is all about risk, there's no guarantee whereby you mist always make profits from what you do, these same miners have also smiles during the $68k ATH, now that the market is near means just a drop in the percentage of their profit realization not yet a complete loss since they still earn from the mining reward, there's still better hope ahead for them since bitcoin operates in volatile price and sooner or later there will be another surges that will catapult the price high above the ATH.

world economy is in a danger. specially Proof of work BTC needs high electricity power to run hash. this might be warning to other mining plants across the world.

That's why you discover the rate at which miners are now into inventing a stable renewable energy source for their mining rig is ever increasing, I've seen varieties of them coming up with different ideas used to mine their bitcoin without fully depending on the government electricity.

[NotATether]

Next time when you post news, post a link to the source like this one: https://www.cnbc.com/amp/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html

Anyway, this seems to be the actual reason for their bankruptcy:

The filing also blamed "litigation with Celsius Networks LLC and its affiliates" for Core's financial struggles. Celsius was once one of the biggest names in the crypto lending space, offering annual returns of nearly 19%, until it filed for bankruptcy this spring.

So it's not because of mining, but because of foolish exposure to Celsius.

The clown crashing cycle continues.

[DaveF]

So they went public and people bought stock in a company that:

1) That is in a very competitive market.
2) Has a well known cyclical market
3) Needs a lot of power and is based in a state that has marginally enough power (how long were they down this summer when the TX grid could not keep up with demand)
4) Needs to spend constantly to keep up (new gear or loose the edge)

And with all of that they stilll bought in with what many people were calling the top of the market.
[yes we were all hoping for $100k BTC but still look at the cycles]

And now, surprise they are going to implode and take their investors money with them.

So good news, more cheap miners on the used market for the rest of us.

-Dave

[avikz]

As per the news everywhere.

Largest public traded bitcoin mining company in USA became huge loss.  Unable to pay debts and move to bankruptcy. So this might be a warning that cost of the mining unable to cover from the current BTC price.

world economy is in a danger. specially Proof of work BTC needs high electricity power to run hash. this might be warning to other mining plants across the world.

Specially , unnecessary cost needs to cut down, not go for high end renovations , pay the creditors on time and debt restructure accordantly.  

This is serious! This is the first time we are seeing a mining related company is going to bankruptcy. There could be many reasons but I belive the fiat inflation and higher electricity cost hit them the most which they are unable to recover due to the falling bitcoin price. This is really sad.

I see no one has posted a reference link. So here it is -

https://www.cnbc.com/amp/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html

[Ucy]

As per the news everywhere.

Largest public traded bitcoin mining company in USA became huge loss.  Unable to pay debts and move to bankruptcy. So this might be a warning that cost of the mining unable to cover from the current BTC price.

world economy is in a danger. specially Proof of work BTC needs high electricity power to run hash. this might be warning to other mining plants across the world.

Specially , unnecessary cost needs to cut down, not go for high end renovations , pay the creditors on time and debt restructure accordantly.  

Bitcoin is well built to handle many issues like this. It very resilient and anti-fragile system.
A mining farm going bust somewhere does not affect it in anyway. Difficulty will adjust if the company stops mining, and the remaining miners will earn more Bitcoin.
I hope this actually discourages huge mining farms and encourage mining pools instead which improve decentralization. Small or medium scale miners from all over the world (esp in cold regions) pooling together resources to mine, earn and share rewards is better. One of the main reasons it is better is that they can use the miners to heat their home during winter or for other multiple uses while mining Bitcoin. That should help them remain profitable when bitcoin isn't high enough for them to sell.
Proof of Work mining is part of what makes Bitcoin very secure.

[DaveF]

This is serious! This is the first time we are seeing a mining related company is going to bankruptcy. There could be many reasons but I belive the fiat inflation and higher electricity cost hit them the most which they are unable to recover due to the falling bitcoin price. This is really sad.

I see no one has posted a reference link. So here it is -

https://www.cnbc.com/amp/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html

1st? Not even close..

https://www.coindesk.com/markets/2018/11/21/bitcoin-mining-firm-giga-watt-declares-bankruptcy-owing-millions/
https://dgtlinfra.com/compute-north-chapter-11-bankruptcy-filing/
https://gazette.com/business/colorado-springs-bitcoin-mining-operation-files-chapter-11-bankruptcy/article_4b42b558-39a7-11eb-a680-bfab3259233b.html

There are many more, these are just the ones whos names I can remember, and therefore google, off the top of my head.

At a guess we are going to see a few more of these over the next few months as people figure out that the magical internet money thing really requires resources and planning and work.

-Dave

[bbc.reporter]

Next time when you post news, post a link to the source like this one: https://www.cnbc.com/amp/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html

Anyway, this seems to be the actual reason for their bankruptcy:

The filing also blamed "litigation with Celsius Networks LLC and its affiliates" for Core's financial struggles. Celsius was once one of the biggest names in the crypto lending space, offering annual returns of nearly 19%, until it filed for bankruptcy this spring.

So it's not because of mining, but because of foolish exposure to Celsius.

The clown crashing cycle continues.

We cannot continue to be in denial of reality that the higher costs of electricity is the biggest problem. This is what the article mentioned from the same source.

The crypto miner said its "operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs," as well as "the increase in the global bitcoin network hash rate" — a term used to describe the computing power of all miners in the bitcoin network.

https://www.cnbc.com/amp/2022/10/27/bitcoin-miner-core-scientific-warns-it-might-go-bankrupt-stock-plunges.html

However, the reason why is much less important than what might occur if this problem continues to bother more miners. We should be more concerned on miner capitulation.

[OgNasty]

This is a good sign that we're nearing the bottom of the mining drought.  When the largest players in the space go down, it usually is a boon to the rest of the marketplace.  I don't think this will be any different.  Core Scientific also isn't currently holding much in the way of BTC so it isn't like they're going to sell a lot of coins and tank the market.  Instead, we'll probably see some good deals on miners next summer and a lowered difficulty level (or at least lower than it would have been).  I don't think this is a reason to be fearful, but instead hopeful that if you're still at it and stacking sats, you're doing better than some of the larger players in the space.

[Darker45]

Let them fall if they must. That's what they get for exposing themselves to unsustainable investments. It is not indicated how much exposure they have with Celsius but I guess it is significant enough to have contributed so much to their downfall. Electricity is one of the reasons, of course, but they're not the only miners operating in Georgia, Kentucky, and Texas. Also, the price of Bitcoin is uniform to all of them, but not all of them are in critical condition.

But what has it got to do with the world economy?

[bbc.reporter]

@OgNasty. The cryptobillionaires would certainly agree that there is no reason to be fearful hehe. As mentioned in news articles, there are some them who have begun offering troubled miners loans to give them the cashflow to continue their operations in this bear market. This might really be a bail out, however, this is a bail out that is much needed to avoid miner capitulation.

[Daltonik]

Because of their short-sighted policy in choosing partners and investing in dubious projects, they now complain about the low price of bitcoin and high tariffs, but didn't Core Scientific unload more than 7000 bitcoins on the market in the summer, and after that they thought that the price would grow.

[bbc.reporter]

@Daltonik. I am skeptical on their statement about blaming Celsius because they could have been bankrupted regardless if they had funds or not have in Celsius. I will say again that we cannot be in denial that the low price of bitcoin are killing much of the miners who cannot achieve maximum productivity corresponding to mining difficulty and the price of electricity.

For much of the people in the thread it is bankrupted by Celsius and complain on the low price of bitcoin, high price of elecricity. However, it can also be bankrupted because of low bitcoin price then blame Celsius.

I might be mistaken, however. They are a public company, anyone can research their quarterly net earnings from bitcoin mining.

[stompix]

So it's not because of mining, but because of foolish exposure to Celsius.
The clown crashing cycle continues.

It wasn't investing or depositing with that Ponzi scheme, Celsius bought gear and hosting from Core, and they still owe them money, it was about $5 million and a running 2 million loss a month if they could still make ~35 cents per TH/s like the whole period last year from April till the end of the year instead of the ow 7cents per TH/s they could have easily covered the running cost from the profits, but they are barely profitable themselves.

I hope this actually discourages huge mining farms and encourage mining pools instead which improve decentralization. Small or medium scale miners from all over the world (esp in cold regions) pooling together resources to mine, earn and share rewards is better. One of the main reasons it is better is that they can use the miners to heat their home during winter or for other multiple uses while mining Bitcoin.

If people go bankrupt at 4 cents per kWh, how many do you think will mine when their electricity prices are 10 times that?
Ok, you do it for heating, but you need sound insulation, you need a stand-alone house, you need to sometimes shut it down as you don't need that much heat, and what will happen in summer? 90% of the hashrate goes down one single major farm owns some other 90% of the hashrate?