Bitcoin (BTC) miner Core Scientific has warned of “substantial doubt” they will be able to continue operations over the next 12 months given financial uncertainty.
Its quarterly report filed On Nov. 22, the United States Securities and Exchange Commission reported that the firm had incurred a net loss (of $434.8 million) over the third quarter in 2022.
Its total net losses for 2022, after net losses of $862 millions in the second quarter, are at $1.71 trillion.
The company suggested in order to continue its operations through to November 2023, it will require additional liquidity, adding that it anticipates its cash resources “will be depleted by the 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.”
It said it also had doubts about its ability to raise funds through financing or capital markets, citing “uncertainties and current market conditions,” which have reduced the availability of those types of liquidity sources.
Rising energy costs, the falling price of Bitcoin and an increased hash rate were also cited as reasons for why it’s suffering a liquidity squeeze, adding that further “substantial doubt exists” with its ability to continue operating, as its “very difficult to predict when or if Bitcoin prices will recover or energy costs will abate.”
Core Scientific had previously indicated in an Oct. 26 SEC filing that a low Bitcoin price, the rising cost of electricity and a refusal from bankrupt crypto lender Celsius to repay a $2.1 million loan could result in its cash resources being “depleted by the end of 2022 or sooner.”
Core Scientific took steps to alleviate financial stress, such as decreasing operating costs and delaying capital expenditures.
It also declined to make payments to certain firms from which it had borrowed. The company warns that it might be sued and could face increased interest rates if it doesn’t pay.
Related: Turbulence in the blockchain industry despite solid Bitcoin fundamentals:
Core Scientific isn’t the only crypto mining company struggling to keep operating in the market. Argo Blockchain is looking to raise additional liquidity through subscription for ordinary shares. Argo Blockchain warned that it could also cease operations if it doesn’t succeed.
Australian mining firm, Iris Energy, is also showing signs of financial distress, revealing in a Nov. 21 filing to the SEC that it had unplugged hardware due to the units producing “insufficient cash flow.”
Charles Edwards (founder of Capriole Investments), has been very bearish about Bitcoin mining. He noted in a Nov. 22, tweet, that this type response is to be expected when Bitcoin’s price is lower than mining costs.
Because the units do not produce enough cashflow, Bitcoin miners “unplugging” their hardware.
Iris Energy goes bankrupt
This is what happens if we spend more than the Bitcoin Electrical cost. Many people don’t have the financial sense to continue running their mining rigs. pic.twitter.com/kjrC6j3KVf
— Charles Edwards (@caprioleio) November 22, 2022