Largest Bitcoin Miner By Computing Power Sees Stock Fall 80% In Week

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Last Updated on 30 October 2022 by CryptoTips.eu

Jeroen Kok

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While Bitcoin, Ethereum and especially Dogecoin are doing very well this week, it seems like another industry branch of the crypto world is in trouble. This time it is the Bitcoin mining companies that are looking bleak.

Since 2020, anyone who did not want to invest directly in crypto could do so by buying a share of, for example, Riot Blockchain, Marathon or Hut8. These companies became very well known on sites like WallStreetBets because that year, when Bitcoin broke through $20k again for the first time, they jumped hundreds (to thousands) of percent. Since then, a lot of new professional Bitcoin mining companies have been added.

One of those companies, called Core Scientific, ran into serious trouble this week.

Advertentie.

Debt

Texas-based Core Scientific is mining proof-of-work digital currencies such as Bitcoin and Ethereum Classic (and formerly Ethereum, until the latter switched to the proof-of-stake system after the Merge).

When Core started, it took out a huge loan to buy the equipment needed for crypto mining. Core had calculated that it was necessary for Bitcoin to stay above a certain level in order for the company to make a profit. In 2021, when Bitcoin rose to $69,000, this worked very well. In 2022, when Bitcoin dropped to $20,000 and Ethereum moved to proof-of-stake, their profit margins were compromised.

Earlier this week, Core Scientific admitted that they would no longer pay their debts. The stock fell more than 70% in one day and is now 80% lower in one week. Since the beginning of the year, Core’s share has lost 97%.

Core Scientific has crypto mining companies in Texas, North Dakota, North Carolina, Georgia, and Kentucky. Investors are already anxiously awaiting news from other Bitcoin mining companies.