Bitcoin (BTC) miner Core Scientific has warned there is “substantial doubt” it will be able to continue operations over the next 12 months due to financial uncertainty.
In its quarterly report filed with the United States Securities and Exchange Commission (SEC) on November 22, the firm reported a net loss of $434.8 million for the third quarter of 2022.
After net losses of $862 million in the second quarter, its total net losses for 2022 are at $1.71 billion.
The company suggested it would need additional liquidity to continue operations until November 2023, 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.
It also said it has doubts about its ability to raise funds through financing or the capital markets, citing “uncertainties and current market conditions” that reduce the availability of these types of liquidity sources.
Rising energy costs, the falling price of bitcoin and an increased hash rate have also been cited as reasons why it is suffering from liquidity, adding that there are other “substantial doubts” about its ability to continue operating as it is “very difficult to predict when or if bitcoin prices will recover or energy costs will come down.”
Core Scientific previously indicated in an Oct. 26 SEC filing that the low price of bitcoin, rising electricity costs and the rejection of bankrupt crypto-lender Celsius pay off a $2.1 million loan may result in its cash resources being “exhausted by the end of 2022 or earlier”.
Core Scientific has taken steps to alleviate the financial stress it is under, including reducing operating costs, reducing or delaying capital expenditures, and increasing hosting revenue.
It has also decided not to make payments to some of the firms it borrowed from, warning it could be sued for non-payment and face interest rate hikes as a result.
Core Scientific isn’t the only crypto mining firm trying to continue its operations in the current market, with Argo Blockchain looking to raise additional liquidity through an underwriting of common shares and warning that it is also on risk of traffic stoppage if they don’t.
Australian mining firm Iris Energy is also showing signs of financial distress, it revealed in a 21st SEC filing. that he had disconnected hardware due to units producing “insufficient cash flow”.
The founder of asset manager Capriole Investments, Charles Edwards, has been particularly bearish on the state of bitcoin mining, noting in a tweet on November 22 that this type of reaction is to be expected when the price of bitcoin is below the mining price.
Bitcoin miners are “disconnecting their hardware” because “the units are producing insufficient cash flow.”
Iris Energy went bankrupt.
This is what happens when we spend time under bitcoin electricity costs. For many, it no longer makes sense to run their mining rigs. pic.twitter.com/kjrC6j3KVf
— Charles Edwards (@caprioleio) November 22, 2022