Core

Crypto Market Roundup — CORE and WIF Outshine in a Week of Market Volatility

April 1, 2024 Bitcoin.com

Economist Alex Krüger Says Bitcoin All-Time Highs Coming Soon, Predicts 4x Move for One Layer-One Altcoin

April 1, 2024 The Daily Hodl

Economist Alex Krüger Bullish on One Under-the-Radar Layer-One Altcoin, Says Crypto ‘Can Get Crazier’

March 25, 2024 The Daily Hodl

Core Scientific shuts down 37K mining rigs it was hosting for Celsius

January 4, 2023 Coin Telegraph

Breach

Core Scientific estimates that canceling the agreement with Celsius will provide $2 million in revenue per month as long as Bitcoin stays around $16,700.

Bankrupt cryptocurrency lender Celsius Network has agreed to let Bitcoin (BTC) miner Core Scientific shut off more than 37,000 mining rigs it had been hosting for Celsius during the miner’s bankruptcy proceedings.

Core Scientific filed a revised proposed order on Jan. 3 that incorporated “revisions acceptable to Celsius” stating “all Celsius rigs will be powered down effective January 3, 2023 and will not be restarted during the transition period.”

On Oct. 19, Core Scientific accused Celsius of failing to pay its power bills, later citing the non-payment as a major factor in the liquidity issues that led to the Bitcoin miner filing for Chapter 11 bankruptcy on Dec. 21.

On Dec. 28, Core Scientific filed a motion seeking approval to reject Celsius’ contracts, claiming the firm’s failure to pay its power bills constituted a material breach of contract.

According to the court filings, the termination of the agreement would apparently allow Core Scientific to generate a revenue of $2 million per month from the space currently occupied by Celsius’ mining rigs.

The hosting deal’s terms allowed Core Scientific to pass on some of the power costs to Celsius, and those costs have considerably increased since Russia’s invasion of Ukraine.

According to the rejection motion, covering the increased power fees cost Core Scientific almost $7.8 million as of Dec. 28 and the miner noted it “cannot afford to continue shouldering the burden of Celsius’ unpaid power costs.”

The cost of production has increased for miners while the price of Bitcoin has decreased, which has eaten into miners’ bottom line and contributed to the “hash price” — the revenue Bitcoin miners can earn per unit of hash rate — falling over 75% over 2022.

*Bitcoin Hashprice Index. Source: Luxor Technologies*

Miner’s lack of profitability combined with the costs associated with expansion efforts caused many Bitcoin miners to struggle toward the end of 2022 and share prices plummeted as a result.

Core Scientific has seen their share price fall by 99.15% over the course of the year, while Iris Energy and Riot Blockchain saw falls of 91.79% and 85.09%, respectively.

*Bitcoin miners’ stock performance. Source: Luxor Technologies*

100%: Public Bitcoin miners sold almost everything they mined in 2022

December 28, 2022 Coin Telegraph

Argo

Publicly listed Bitcoin miners sold off nearly everything they mined in 2022 but appear to have started accumulating reserves once again.

Publicly listed Bitcoin (BTC) miners sold off almost all of the Bitcoin they mined throughout 2022, leading to a debate over whether the sales created "a persistent headwind" for the Bitcoin price or not.

Analyst Tom Dunleavy from blockchain research firm Messari shared the data in a Dec. 26 tweet, indicating that approximately 40,300 of the 40,700 BTC mined by Core Scientific, Riot, Bitfarms, Cleans Park, Marathon, Hut8, HIVE, Iris Energy, Argo and Bit Digital from Jan. 1 to Nov. 30 was sold off.

BTC miners sell roughly 100% of the coins they mine

The 10 public bitcoin miners
detailed here mined ~40.7k BTC and sold ~40.3k in 2022

This is a persistent headwind for BTC and for no other reason a good thesis to be bullish the ETHBTC ratio trade pic.twitter.com/L1iI6Z07p7
— Tom Dunleavy (@dunleavy89) December 26, 2022

The reserves held by mining firms have decreased considerably during the latter half of 2022, particularly throughout November, as the crypto industry reeled from the effects of the FTX fallout.

*Miner reserves vs Bitcoin price from Jul. 1 to Dec. 28. Source: CryptoQuant.*

Dunleavy believes that miners consistently selling off newly produced Bitcoin places downward pressure on the price of the leading cryptocurrency.

However, some industry commentators such as BitMEX’s former CEO, Arthur Hayes, believe the selling pressure created by the increased sales of Bitcoin miners is negligible.

He opined in a Dec. 9 blog post that “even if miners sold all the Bitcoin they produced each day, it would barely impact the markets at all.”

According to Bitcoin Visuals, on Dec. 26 the daily trading volume for Bitcoin was $12.2 billion. The outflow from miners on the same day, according to CryptoQuant, was 919 BTC ($15.35 million), which represents just 0.13% of the total volume traded.

Miner's reserves have rebounded slightly during December, increasing by nearly 1%. The figure contributes to the view shared in a Dec. 27 post by crypto analyst IT Tech that the situation for miners appears to be stabilizing.

#Bitcoin miners - update. Is there anything to worry about?
1.
Miner Outflow
Miner Inflow
Miner Reserve
White line on the bottom - miner to Exchange flow

2. Mining difficulty
3. Miner selling power
4. Hashrate 7D MA

Full analysishttps://t.co/E3o0cgaNxu
— IT Tech (@IT_Tech_PL) December 27, 2022

Miners have faced significant headwinds throughout the year, with high electricity prices, falling crypto market prices and a higher mining difficulty eating into their bottom line.

With the cost of production for miners increasing while the Bitcoin price has been decreasing, miners such as Core Scientific have been forced to sell some of their reserves at a loss to fund their ongoing operations and efforts to expand.

Stock price for troubled Bitcoin miner Core Scientific surges 200%

December 16, 2022 Coin Telegraph

$72M

After a flurry of bad news throughout 2022, the miner has been offered a lifeline that could enable it to see out the current crypto winter.

Bitcoin (BTC) miner Core Scientific’s stock has soared nearly 200% in the past four days, following the positive reception for a Dec. 14 financing proposal from a current creditor that is hoping the firm can avoid bankruptcy.

Shares for the embattled miner were sitting just over 13 cents on Dec. 12, before climbing to nearly 40 cents as the market closed on Dec. 15 — a gain of 198%.

*A five-day chart showing Core Scientific’s share price on Nasdaq. Source: TradingView*

According to financial media firm Marketbeat, traders acquired 6,572 call options on Dec. 15, 136% more than the average volume of 2,780, indicating that many are bullish on the stock and are betting that the price will continue rising.

Some members of the Bitcoin community were also acquiring shares, hoping for a huge return if the financing plan goes through and the firm can survive through the bear market.

Bought a slug of $CORZ at the close. If the financing goes through and they can survive through the bear market, this trade could become an absolute MONSTER. DYOR. For your reference: pic.twitter.com/eHF4NXjcvH
— CR (@CashRocket) December 14, 2022

The rally could be the start of a turnaround, or just a dead cat bounce. Core Scientific was hit with a run of bad news throughout 2022 and despite recent gains the price is still 95% lower than it was at the start of the year.

On Dec. 14 financial services platform B. Riley wrote a letter to Core’s shareholders and lenders, outlining a $72 million financing plan that it believes is sufficient to prevent the miner from being forced to file for Chapter 11 bankruptcy.

Should the deal be accepted, the first $40 million would be funded “immediately, with zero contingencies,” while the rest of the funds would be issued if Core agrees to suspend payments to equipment lenders until the price of Bitcoin is back above $18,500 — a price the leading cryptocurrency has been below since Nov. 9.

B. Riley suggests the financing will provide Core with two years of operating cash, and notes that their analyst forecasts that the miner can generate annual earnings of approximately $165 million at a Bitcoin price of $18,000, with an extra $20 million for each $1,000 price increase.

Core was hit hard by the broader market downturn and filed a report on Oct. 26 citing a low BTC price, high electricity rates and a refusal from bankrupt crypto lender Celsius to repay a $2.1 million loan as reasons why it might default on some of its debts.

The bad news continued on Nov. 22, when the miner admitted in a quarterly report that its cash reserves may be depleted by the end of 2022 and it did not believe it would be able to raise funds through financing or capital markets given the current market conditions.

Creditor offers Bitcoin miner Core Scientific $72M to avoid bankruptcy

December 15, 2022 Coin Telegraph

Creditor offers Bitcoin miner Core Scientific M to avoid bankruptcy

Coin Telegraph

B. Riley suggested the embattled miner’s issues were “self-imposed” and outlined a path for it to avoid bankruptcy.

Financial services platform B. Riley has offered Bitcoin (BTC) miner Core Scientific $72 million in financing to avoid bankruptcy and preserve value for Core Scientific stakeholders.

B. Riley, a top lender to Core Scientific with $42 million in loans currently outstanding, outlined the terms of the financing agreement in a Dec. 14 letter noting it's prepared to fund the first $40 million “immediately, with zero contingencies.”

The finance platform suggested the remaining $32 million would be conditional on the BTC miner suspending all payments to equipment lenders while Bitcoin prices are below $18,500.

The last time the price of Bitcoin was above $18,500 was on Nov. 9, before it fell over 14% in one day.

B. Riley’s assessment of the predicament Core Scientific is in was scathing, suggesting it had deployed “an aggressive, ill-conceived strategy […] to continue to build out power facilities and expand miners while never selling Bitcoin on hand and never hedging prices.”

It noted due to this approach Core Scientific was forced to sell 9,618 BTC in April at a value of $362 million which represented a significant loss to the miner.

Core Scientific admitted in a quarterly report filed on Nov. 22 that it did not have enough cash to get through till 2023. It also said it had doubts about its ability to raise funds through financing or capital markets.

In an Oct. 26 filing, the firm pointed to the low price of Bitcoin, rising electricity costs and a refusal from bankrupt crypto lender Celsius to repay a $2.1 million loan as the reason for its financial woes.

B. Riley seemed confident Core Scientific would accept the financing offer and reminded the miner of its responsibility to shareholders, noting:

“In our view it would be a gross violation of the fiduciary duties owed by the Board and Management for those fiduciaries—who must put our interests ahead of their own—to authorize a Chapter 11 filing.”

Since the beginning of 2022, the share price of Core Scientific has fallen 97.7% from $11.02 to $0.25.