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Core Scientific CORZ, one of the largest publicly traded Bitcoin BTC/USD mining companies in the U.S., is filing for Chapter 11 bankruptcy protection on early Wednesday morning, CNBC reported, citing sources.
What Happened: According to CNBC, this drastic move follows a year of plummeting cryptocurrency prices and ever-increasing energy costs.
Core Scientific’s market capitalization has dropped drastically — from a $4.3 billion valuation in July 2021 when it went public through a special purpose acquisition vehicle (SPAC), to just $78 million after trading closed on Tuesday. This marks a decline of more than 98% in the stock’s value over the past year.
Core Scientific did not immediately respond to Benzinga’s request for comment.
See More: Best Crypto Day Trading Strategies
The principle behind Core Scientific’s business model is to mine for proof-of-work cryptocurrencies like Bitcoin. Backed by highly efficient data centers and specialized computers, the process validates transactions and simultaneously creates new currency tokens, all at the expense of expensive equipment which consumes large amounts of electricity.
The company previously warned in an October filing that its common stockholders could suffer a complete loss of their investment. The Bitcoin mining firm further stated that it was “severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate, and the litigation with Celsius.”
Price Action: At the time of writing, BTC was trading at $16,183 up 0.15%. CORZ was trading at $0.20, up 3.07%, on Tuesday, according to Benzinga Pro.
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Image and article originally from www.benzinga.com. Read the original article here.