Crypto winter

Core Scientific : Forced to sell 79% of BTC to pay its debt

Core Scientific, sold 79% of its Bitcoin holdings in June to survive the bear market.

Image Source : Medium

One of the leading crypto-mining companies, Core Scientific, sold 79% of its Bitcoin holdings in June to survive the bear market. The company sold 7,202 Bitcoins for about $23,000 each, earning nearly $167 million.

According to the company’s monthly announcement, Core Scientific used the money to pay for ASIC servers and planned debt. As of June 30, Core Scientific holds 1,959 Bitcoins, which is equivalent to about $132 million.

Core Scientific CEO Mike Levitt said the current bear market is putting tremendous pressure on the market, while interest rates and inflation are also rising. He said:

Our company has successfully weathered downturns in the past, and we are confident in our ability to weather the current market turbulence.

We are working to strengthen our balance sheet and improve our liquidity to meet this challenging environment, and continue to believe that we will be operating at 30+ EPS in our data centers by the end of 2022.

Core Scientific has more than 180,000 servers worldwide and provides nearly 10 percent of the world’s computing power. The company also said it will continue to sell self-exploiting Bitcoins to pay for various expenses in the coming months.

Mining companies in trouble

A selling trend emerged among Bitcoin miners in early June when Bitcoin traded for just over $30,000. Even then, miners were inclined to cash in immediately as they anticipated a further drop in BTC prices.

They proved correct when a few weeks into June, Bitcoin hit its lowest level in 18 months. BTC prices fell as low as $22,600, causing mining equipment prior to 2019 to become unprofitable. According to a recently published study, public mining companies had to sell 30% of their BTC reserves in the first four months of 2022 to survive the crypto winter, despite reduced operating challenges.

Core Scientific isn’t the only mining company to go public with its financial woes. According to reports, Compass Mining failed to pay its $1.2 million electricity bill in June. While the company denied the allegations, its CEO and CFO resigned.

FTX founder Sam Bankman-Fried has been closely monitoring developments on the mining front. According to reports, he expects the problems among the mining companies to spread and is looking to buy some of the troubled mining companies.

The coldest winter on record

While the crypto market has seen several winters, the current one is by far the coldest, according to Glassnode. The current bear market is the first where Bitcoin and Ethereum are trading below their ATH from the previous cycle.

The report also revealed that June 2022 has become the worst performing month for Bitcoin since 2011. However, the bullish sentiment is still visible even under these conditions. The numbers show active addresses and the number of transactions dropped significantly in June. At the same time, hodlers are taking advantage of the affordable prices and buying more than 60,000 Bitcoins per month.

Although this is the coldest winter, the buying rate is the “most aggressive rate in history” so far.

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