Core Scientific under “substantial doubt” to continue without more money

Bitcoin (BTC) miner Core Scientific has warned of “substantial doubt” that it will be able to continue operations for the next 12 months given the financial uncertainty.

In its quarterly report filed with the U.S. Securities and Exchange Commission (SEC) on Nov. 22, the firm indicated that it accrued a net loss of $434.8 million in the third quarter of 2022.

After net losses of $862 million in the second quarter, total net losses for 2022 were $1.71 billion.

The company suggested that to continue operations until November 2023, it would need additional liquidity, adding that it expected its cash resources “to be exhausted by 2022 or earlier.”

“Given the uncertainty surrounding the Company’s financial condition, there is significant doubt about the Company’s ability to continue as a going concern through November 2023.”

He said he also has doubts about his ability to raise funds through financing or capital markets, citing “uncertainty and current market conditions” that have reduced the availability of those types of sources of liquidity.

Rising energy costs, the falling price of Bitcoin and an increased hashrate were also cited as reasons why it is suffering from a liquidity squeeze, adding that there is further “significant doubt” about its ability to continue operating as it is “very difficult to predict when or if bitcoin prices will recover or energy costs will decrease.”

Core Scientific previously indicated in an Oct. 26 SEC filing that the low price of Bitcoin, the rising cost of electricity, and the refusal of bankrupt crypto lender Celsius to repay a $2.1 million loan could lead to “exhaustion of cash resources by end of 2022 or earlier.”

Core Scientific has taken steps to ease the financial stress it is under, including reducing operating expenses, reducing or slowing capital expenditures, and increasing hosting revenue.

It has also decided not to make payments to some of the firms it has borrowed from and is warning it could be sued for default and face interest rate hikes as a result.

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Core Scientific is not the only crypto mining firm struggling to stay afloat in the current market, with Argo Blockchain seeking to raise additional liquidity through a common stock subscription and warning that it is also at risk of going out of business. if he fails to do so.

Australian mining firm Iris Energy is also showing signs of financial distress, revealing in a Nov. 21 filing with the SEC that it has shut down hardware due to the units producing “insufficient cash flow.”

The founder of asset manager Capriole Investments, Charles Edwards, was particularly negative about the state of bitcoin mining, noting in a tweet on November 22 that this type of response is to be expected when the price of bitcoin is below the cost of mining.