Core Scientific, The world’s largest Bitcoin mining operation, cannot win in a bear market.
This proverb, which gained widespread recognition after being used on the Koh Lanta survival program, has a place in the world of cryptocurrencies, and more specifically in the world of Bitcoin mining. Even more so following a year in which the market was in a bearish trend. Big firms have exited the market (loan platforms, exchanges (first or second tier)), and the list will undoubtedly have room for other names in the weeks to come.
Mining for Bitcoin: Core Scientific needs to make the calculator available.
The “miners’ capitulation” is one of the historical events that can be used to identify downturn markets. Miners with less tenacity, at the very least. The price of a token has gotten quite near to its average production price after an initial phase of enthusiasm and mining that was extremely profitable in terms of bitcoin. Which puts a significant amount of pressure on those who keep the hash rate.
Profitability has decreased as a result of the drop in prices that has occurred since November 2021 (-76% for BTC). Even though monthly electricity costs have not decreased at all, just the opposite is true. Core Scientific dug out the calculator, and the results are not flattering, to say the least.
Following a loss of net assets of 862 million dollars during the second quarter of 2022, the company’s overall annual net losses equal 1.71 billion dollars.
“Given the lack of clarity surrounding the current state of the company’s finances, there is a great deal of uncertainty about the company’s capacity to maintain its business operations through November 2023.”
Bitcoin: A surefire way to get from rich to poverty.
The severity, but notably the volatility, of market cycles’ tail end, is particularly severe in cryptocurrency markets. Even in the case of “the big ones.” Both amateurs and professionals can leave their capital there, regardless of whether they are playing for the top or the bottom. Learn more here. Bitcoin miners are subject to this universal law in the same way that everyone else is. Mining farms demand a substantial financial commitment, which is why the costs of operation and daily maintenance are of equal importance.
At the moment, the company Core Scientific is operating amid this extremely brutal market downturn. This raises serious concerns about the company’s ability to continue operations after November 2023. In an earlier report that the miner had given to the SEC back in October, he had already pointed out three significant obstacles in attempting to explain his situation:
A low price for Bitcoin makes mining it unprofitable and results in ever-increasing electrical expenses.
Celsius’s failure to honor its debt to Core Scientific for $2.1 million
It’s possible that by the end of the year 2022, all of the cash reserves held by the company will have been significantly depleted, as stated in this report. When you factor in the recent increase in the difficulty of mining Bitcoin, the equation makes it even less likely that Core Scientific will be able to maintain its current level of financial stability.
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