Shares of Sorge Scientific fell 70% on news of its financial situation

A confluence of circumstances led to the dire financial situation of Sogue Scientific.
On October 27, shares of bitcoin miner Core Scientific on the New York Stock Exchange Nasdaq momentarily fell by almost 70%, so investors reacted to documentsThe company provided to the U.S. Securities and Exchange Commission (SEC). From these documents we learned that the company has decided not to make its debt payments, which fall in October and November of this month.
As the organization stated:

“Given the uncertainty that has developed regarding the company’s financial condition, substantial doubt exists regarding the organization’s ability to continue as a going concern.”

Recall that if the company were to go bankrupt, the value of its stock would be effectively zero. Compared with last year’s peak, the company’s shares are already losing more than 97%.
Analysts believe that in the case of Core Scientific, most likely, a confluence of circumstances caused the distressing financial situation of the company: rising energy tariffs, excessive debt burden, as well as the “bear” bitcoin market and the simultaneous growth of bitcoin hashrate.
Individually, these factors do not have a significant impact on bitcoin miners, but their combined effect can be very negative. In addition, Core Scientific is waiting in November for a decision from a U.S. court regarding a contract with Celsius Network, which has filed for bankruptcy and currently has some legal protection.
At Core Scientific statedThe SEC filings reveal that they have paid $1.65 million in hosting fees for Celsius Network’s mining equipment at their own expense, but that they have not received payment from Celsius Network, according to the organization. Core Scientific is asking a court in the United States to either cancel its contract with Celsius Network or force Celsius Network to pay its bills.
For its part, Celsius Network statedthat Core Scientific’s 10,885,000 bitcoin miners are an important element in generating the much-needed cash flow for Celsius Network to pay its obligations in turn.
Given that logic, the U.S. court may not terminate Celsius Network’s contract with Core Scientific, which could make things worse for Core Scientific itself, which had only 24 BTC in its corporate reserves as of October 26. The company has sold more than 1,000 BTC on the market since the beginning of October.
Meanwhile, the Core Scientific situation likely won’t have much impact on the upward trend of of interest global investors to bitcoin mining stocks.

Leave a Comment