core scientist Korzone of the largest publicly traded Bitcoin BTC/USD CNBC, citing sources, reported that mining companies in the US are filing for Chapter 11 bankruptcy protection on Wednesday morning.
What happened: According to cnbcThe drastic move comes after a year of falling cryptocurrency prices and ever-increasing energy costs.
Core Scientific’s market capitalization has shrunk significantly from a valuation of $4.3 billion in July 2021, when it went public through a special purpose acquisition vehicle (SPAC), to just $78 million after the close of trading on Tuesday. This reflects a decline of over 98% in the stock’s value over the past year.
Core Scientific did not immediately respond to Benzinga’s request for comment.
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The principle behind Core Scientific’s business model is to mine for proof-of-work cryptocurrencies such as bitcoin. Backed by highly efficient data centers and specialized computers, the process validates transactions as well as creates new currency tokens at the cost of expensive equipment that consumes vast amounts of electricity.
company first warned in October filing that its common shareholders could suffer a complete loss of their investments. The bitcoin mining firm further said that it was “severely impacted by a prolonged decrease in the price of bitcoin, an increase in electricity costs, an increase in the global bitcoin network hash rate, and litigation with Celsius.”
price action: While writing, B T c was trading at $1,213, down 3.36%. CORZ was trading at $0.20 with a gain of 3.07% on Tuesday. According to Benzinga Pro,