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Core Scientific might not make it past November 2023 after revealing $1.7B in losses

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Core Scientific might not make it past November 2023 after revealing $1.7B in losses

Core Scientific might not make it past November 2023 after revealing $1.7B in losses Andjela Radmilac · 2 hours ago · 2 min read

Core Scientific said in its quarterly report that “substantial doubt” exists about its ability to continue going if it fails to raise liquidity.

2 min read

Updated: November 23, 2022 at 5:29 pm

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Cover art/illustration via CryptoSlate

Core Scientific, one of the largest publicly traded Bitcoin miners, might not make it until the end of the year.

In its quarterly report filed with the SEC, the company said “substantial doubt” exists about its ability to continue going if it fails to raise liquidity.

“However, the ability to raise funds through financing and capital market transactions is subject to many risks and uncertainties and current market conditions have reduced the availability of these capital and liquidity sources.

The Company anticipates that existing cash resources will be depleted by the end of 2022 or sooner. Given the uncertainty regarding the Company’s financial condition, substantial doubt exists about the Company’s ability to continue as a going concern through November 2023.”

Doubts about the company’s solvency were first raised at the end of October when a previous filing revealed its operating performance and liquidity have been severely impacted by rising electricity costs and falling Bitcoin prices.

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Core Scientific’s 10-Q filing now shows no doubt about the company’s struggles, as the company reported a $434.8 million net loss in the third quarter alone. The $862 million in net losses accrued in the second quarter bring the company’s total net losses for the nine months ended Sept. 30 to $1.71 billion.

Table showing Core Scientific’s Q3 and yearly net losses in 2021 and 2022 (Source: SEC)

Throughout the year, the company generated only $519 million in revenue. It reported $162.5 million in revenue for the third quarter.

Table showing Core Scientific’s Q3 and yearly revenue in 2021 and 2022 (Source: SEC)

Core Scientific claims that the losses it accrued were a result of rising electricity costs and a rapidly declining price of Bitcoin. The majority of the company’s revenue from hosting came from two customers — one accounted for 46% of its revenue in 2022, while the other accounted for 19%.

In a separate part of the filing, the company said Celsius was “one of its largest customers.” Since filing for voluntary relief under chapter 11 in September, Celsius has reportedly been attempting to withhold payment of certain charges billed as part of its contract with Core Scientific. The company is actively seeking a resolution from the bankruptcy court.

However, the filing reveals that losses Core Scientific accrued from other expenses could dwarf the amounts it’s seeking from Celsius.

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The company revealed that it provides hosting services to entities that are managed and owned by its executives. It also sold mining equipment to its own executives, with the revenue from these sales more than doubling when compared to last year.

Equipment sales revenue from its own executives more than doubled from $29.1 million in 2021 to $67.3 million in 2022.

Since the beginning of the year, Core Scientific spent $1.8 million on private jets and business trips for its executives. It also lost $13.1 million on exchanges and entered into an agreement to lease office space for its new headquarters for a base rent of $14 million to be paid over a period of 130 months.

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Bybit

‘Just’ 4% – How significant in number are crypto-layoffs these days

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‘Just’ 4% – How significant in number are crypto-layoffs these days

Layoffs in the cryptocurrency sector account for just 4% of the total layoffs in the technology sector this year.

According to CoinGecko, the crypto-sector laid off 4,695 employees, as of 13 November. This puts the sector at 10th position in the list of technology sectors with maximum layoffs.

‘Just’ 4,695 layoffs in the crypto-sector

The consumer technology sector led the way with 18,486 layoffs, accounting for 15.6% of all technology layoffs. Facebook’s parent company, Meta, recently laid off 11,000 employees, accounting for 59.5% of all consumer technology layoffs. Twitter is laying off an estimated 3,700 employees too following Elon Musk’s takeover.

The food technology sector came in second with 13,203 layoffs, accounting for 11.1% of all technology layoffs. Getir, a Turkish delivery company, laid off 4,480 employees in May, accounting for 33.9% of all food technology layoffs. Foodpanda, Delivery Hero, and Shopee have also let go of a significant number of employees.

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Source: CoinGecko

The top 5 technology sectors, viz. consumer, food, transport, finance, and healthcare technology sectors make up more than half of technology layoffs. Together, they represent a combined 53.1% of industry layoffs.

Major layoffs in the crypto-sector in 2022

Leading crypto and blockchain companies have discontinued the services of a huge number of their staff members.

A leading NFT company Dapper Labs laid off 22% of its workplace in early November, i.e. approximately 135 staff members. Web3 firm Digital Currency Group laid off around 10% of its staff around the same time.

Michael Novogratz’s Galaxy Digital is also reportedly looking to lay off around 15-20% of its staff. Crypto-exchange BitMeX has also been planning to fire 30% of its staff.

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Last month, the cryptocurrency trading broker NYDIG reportedly fired its workforce by about 33% days before it replaced two executives, including its CEO. Roughly 110 employees were impacted during the process. The same month, Crypto.com reduced its staff by 30-40%, laying off over 2,000 individuals.

In August, crypto-mining company Core Scientific laid off 10% of its workforce after it announced a net loss of $862 million for the second quarter of 2022.

In July, cryptocurrency lending firm Celsius laid off around 150 individuals. Soon enough, it filed for bankruptcy. Around the same time, the Chinese crypto-firm Huobi also let go of more than 30% of its workforce once China began enforcing its crypto-mining ban strictly.

In June, cryptocurrency exchange Bybit laid off 20-30% of its workforce. Another exchange Coinbase laid off approximately 1,100 employees, around 18% of its workforce.

Even though layoffs in the crypto-industry are not as high as those in other tech sectors, things could change for the worse. Especially since the FTX crisis might precipitate more layoffs in affected firms soon.

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Ser Suzuki Shillsalot has 8 years of experience working as a Senior Investigative journalist at The SpamBot Times. He completed a two-hour course in journalism from a popular YouTube video and was one of the few to give it a positive rating. Shillsalot’s writings mainly focus on shilling his favourite cryptos and trolling anyone who disagrees with him. P.S – There is a slight possibility the profile pic is AI-generated. You see, this account is primarily used by our freelancer writers and they wish to remain anonymous. Wait, are they Satoshi? :/

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2 Lenders Claim Bitcoin Miner Iris Energy Defaulted On Equipment Loans Worth $103 Million

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2 Lenders Claim Bitcoin Miner Iris Energy Defaulted On Equipment Loans Worth $103 Million

Another bitcoin mining company is dealing with financial issues as Iris Energy’s Form 6-K filing with the U.S. Securities and Exchange Commission (SEC) shows the company could face default on two loans. Iris Energy’s Form 6-K filing explains to the SEC that the firm “received a notice from its lender alleging the occurrence of an event of default and acceleration under the respective limited recourse equipment financing facilities.”

Bitcoin Mining Company Iris Energy Faces Default on 2 Loans

On Nov. 7, 2022, the bitcoin mining firm Iris Energy updated investors concerning October’s operations and the company noted it currently operates a hashrate of around 3.9 exahash per second (EH/s). The bitcoin mining company also said its “Mackenzie expansion” in British Columbia, Canada, from 50 megawatts (MW) to 80MW is “on track for energization by the end Q4 2022.” Also, the firm’s Childress facility in Texas is still in the construction and energization phase and operations continue on that end.

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However, a Form 6-K SEC filing registered in November indicates that two lenders are alleging the company defaulted on $103 million in equipment loans. The loans are being held by two special-purpose vehicles (SPV) and the lenders have sent a “purported acceleration notice” for the alleged defaults. Iris Energy said that a large fraction of its exahash is unaffected by the SPV’s purported acceleration notice. Iris Energy’s SEC filing states:

2.4 EH/s of miners and all of the group’s data center capacity and development pipeline are unaffected by the limited recourse equipment financing arrangements or purported acceleration notice.

The bitcoin miner’s filing with the U.S. regulator follows other mining companies dealing with financial issues. For instance, at the end of September, Bitcoin.com News reported on Compute North filing for bankruptcy protection. Additionally, Core Scientific told the U.S. SEC that it was having financial difficulties as Core Scientific’s “operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin.”

As far as the Iris Energy filing is concerned, one SPV says it is owed $71 million, and the other claims Iris Energy owes it $32 million. Iris Energy said that it has available data center capacity and it “continues to explore opportunities to utilize this capacity to either host third-party miners or to self-mine utilizing additional miners that the company has available or elects to purchase.”

Iris Energy shares (Nasdaq: IREN) have lost 19.60% against the U.S. dollar during the last five days. A myriad of bitcoin mining companies have also seen shares slide 80% to 90% during the past 12 months and year-to-date, IREN is down 81.68% against the greenback.

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bitcoin miner, Bitcoin miner Iris Energy, Bitcoin mining, british columbia, BTC miner, capacity, compute north, Core Scientific, Default, defaults, IREN, Iris Energy, Iris Energy mining, Iris Energy shares, Iris Energy stock, publicly listed, self-mine, Texas

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What do you think about the Iris Energy SEC filing that shows two companies are alleging default on equipment loans? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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24 BTC

Publicly Listed Bitcoin Miner Core Scientific Publishes Update After SEC Filing That Mentions ‘Restructuring’

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Publicly Listed Bitcoin Miner Core Scientific Publishes Update After SEC Filing That Mentions ‘Restructuring’

On Nov. 7, 2022, the bitcoin mining firm Core Scientific released the company’s October update after the company’s Form 8-K U.S. Securities and Exchange Commission (SEC) filing on Oct. 26, 2022. The filing noted that the company was in the process of exploring “restructuring its existing capital structure.” The update published on Monday indicates that Core Scientific sold 2,285 bitcoins at an average price of $19,639 per bitcoin.

Core Scientific Releases October Update

On Oct. 29, Bitcoin.com News reported on the bitcoin mining firm Core Scientific (Nasdaq: CORZ), as the company’s shares were downgraded by the B. Riley analyst Lucas Pipes following the firm’s Form 8-K SEC filing. Pipes downgraded shares of CORZ to Neutral from Buy and said “compressed self-mining margins have exerted extra pressure on the company’s ability to meet its financial obligations.”

The October update published on Monday shows that the publicly listed mining company has 243,000 colocated and owned application-specific integrated circuit (ASIC) bitcoin mining rigs. During the course of last month, Core Scientific managed to mine 1,295 bitcoins with the firm’s resources. However, the company sold more than it made in October as it sold 2,285 bitcoins during the 30-day span.

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The BTC was sold for $19,639 per unit and the company raked in $44.8 million from the sales in October. Core Scientific holds approximately 62 bitcoin (BTC) as of October 31, 2022, and out of the fleet of 243,000 mining rigs, 143,000 are self-hosted by Core Scientific. The self-mining side of Core Scientific’s entire fleet of ASICs represents 14.4 exahash per second (EH/s).

The company has a total of 24.4 EH/s with the colocated fleet it operates and the company operates facilities in Georgia, Kentucky, North Carolina, and North Dakota. Core Scientific’s update does note that the firm has “completed 287 MW of its data center build-out in Texas.” However, the October update does not disclose anything about meeting the firm’s financial obligations.

While Core Scientific did say it finished a data center in Texas it also noted that it powered down the operation and other facilities it operates “to enhance electrical grid stability.” “In the month of October, the [Core Scientific] powered down its Texas and other data center operations on several occasions,” the company’s update details. “Curtailments in October totaled 5,125 megawatt-hours.”

Core Scientific’s shares started the day at 10:20 a.m. (ET) up 5% against the U.S. dollar. CORZ, however, is down 98.82% against the greenback year-to-date.

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24 BTC, analyst, B. Riley analyst, bankrupt, Bankruptcy, Bitcoin (BTC), bitcoin miner, Bitcoin Miners, BTC, BTC miner, BTC Price, Core Scientific, Core Scientific’s SEC filing, CORZ, CORZ downgrade, mining, nasdaq, negative exposure, October update, reserves, restructuring, SEC

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What do you think about Core Scientific’s October update? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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