Core Scientific, one of the largest publicly traded cryptocurrency mining companies in the United States, is shutting down a large number of mining rigs following bankruptcy proceedings.
According to a court document, the blockchain infrastructure company will shut down more than 37.000 mining rigs. The facilities are those it used to house for the now bankrupt cryptocurrency lending platform Celsius Network.
Core Scientific said in October that Celsius's failure to pay its electricity bill was causing it major cash flow problems. At the time, Core Scientific said it was losing about $53.000 a day to cover increased electricity rates that Celsius was refusing to pay.
The latest filing comes after Core Scientific approved a Dec. 28 motion calling for the Celsius contract to be rejected. In the motion, Core argued that Celsius's failure to pay its electric bills was a material breach of contract. In addition, Core added that it cost nearly $7,8 million to cover the power costs of Celsius's mining facilities.
The latest document reveals that terminating Core Scientific's contract with Celsius will help the mine generate more revenue. Core Scientific estimates it could make up to $2 million a month from the space currently occupied by Celsius's mining facilities.
The Court granted Core Scientific authorization to shut down all of Celsius's mining facilities effective January 3, 2023. The Court also set a 75-day period from the date Celsius must retire its mining equipment. And a period of 30 days from the date of the order in which Celsius can make any claims for damages.
Cryptocurrency winter hurts miners' revenues
According to a report by Reuters, Core Scientific's financial woes aren't just related to Celsius's bankruptcy linked to the Terra explosion. The cryptocurrency miner said in his bankruptcy filing on Dec. 21, 2022 that rising energy costs and the cryptocurrency market winter played a role in his financial tightening.
Core Scientific has also seen its share price plunge 99,28% over the past year. Shares are currently trading at $0,074, down from over $10 a year ago.
However, the firm intends to continue operating as it reaches deals with its investors. Investment bank BlackRock, Core Scientific's largest shareholder, has already shown confidence in the company's plans. According to an SEC filing, BlackRock has granted Core Scientific a new $17 million loan.
In 2022 the price of Bitcoin (quotation BTC) has plunged from around $45.000 to around $16.000. The war between Russia and Ukraine has also caused a rapid increase in energy prices.
Market conditions also affected the revenues of other mining companies. Like Core, Iris Energy and Riot Blockchain have also seen their share prices fall 91,79% and 85,09% respectively over the past year. In a recent statement, Riot said it failed to meet its BTC mining goal despite expanding its hashrate.
