Crypto Miner Core Scientific is selling Bitcoin to Repay its Debts

Core Scientific sold 78% of its bitcoin holdings in June and join and said it would continue to do so.

Core Scientific Inc., a top crypto miner, sold the bulk of its Bitcoin holdings in June as a steep drop in digital assets squeezes finances for even the leaders of the industry. According to the company’s monthly report, it sold 7,202 bitcoins at roughly US$23,000 per token for US$167 million. The sale represents a clearance of 79% of the company’s bitcoin from its balance sheet. The Austin, Texas-based company now holds 1,959 coins. Core Scientific said the sale was necessary to sustain liquidity and pay off debt while also funding growth and operations. The company added that it planned to sell more self-mined coins to fund itself.

Founded in 2017, Core Scientific is one of the largest Bitcoin miners in the world with 180,000 servers and nearly 10% of the current computing power that secures the entire Bitcoin blockchain network as of June 30, according to the latest public filing. The fire sale speaks to the state of cryptocurrencies, which have declined steadily along with other risk assets in light of high inflation and central bank monetary tightening. Bitcoin is the largest cryptocurrency by market capitalization and has lost 58% of its value from the start of the year, and 69% from its all-time high of US$69,000 reached in November 2021.

According to the Mint, Crypto miners struggle to repay debt and complete large purchase orders of expensive mining machines they made during the bull-run several months ago. Operational costs have exceeded mining revenue for some miners as Bitcoin had its worst quarter in more than a decade. High-profile crypto blowups are battering the industry, helping contribute to declines in the world’s biggest cryptocurrency, which fell below US$20,000 last month for the first time since 2020.

“We are working to strengthen our balance sheet and enhance liquidity to meet this challenging environment, and continue to believe that we will be operating in excess of 30 EH/s in our data centers by year-end 2022,” CEO Mike Levitt said in a statement. “We remain focused on executing our plan while taking advantage of distressed opportunities that may arise.”


Why Bitcoin is falling so bad?

Crypto experts say this is because of the wider global climate. It’s not just in the crypto world things are not looking good. Many other assets are also experiencing volatility that’s shaking investors. The S&P 500 Index this week fell in the bear market territory, defined as a drop of at least 20% from the most recent high. Bonds are also sliding, leaving investors few places to hide in markets.

As a result, even the big investors are less free with their money. And many ordinary investors – not rich hedge-fund owners or corporations but people like you and me – have less to invest in anything, full stop. For many, an investment in something as volatile and unpredictable as cryptocurrency feels like a risk too great in these times.

Given today’s macroeconomic environment, with the Federal Reserve tightening interest rates to stave off high inflation, some crypto investors think prices may fall further. Companies are also preparing for a recession and possible “crypto winter,” or when prices fall and stay low for an extended period. It’s unregulated and unprotected by the financial authorities, so if you’re using your savings to invest in it and it loses value, or you lose access to your crypto wallet, your money has gone.