Core Scientific posts $434.8 million loss in Q3

The mining company Core Scientific posted a loss of $434.8 million for the third quarter. The firm said it doubts its ability to continue operations without additional liquidity.

“The ability to raise funds through financing and equity-market operations carries many risks and uncertainties, and current market conditions have reduced the availability of these sources. Given the uncertainty surrounding the company’s financial condition, there are serious doubts about its ability to continue operations in the foreseeable future through November 2023,” according to Core Scientific’s report to the report to the SEC.

The firm said it has taken steps to cut or eliminate operating and capital expenditures, reduce construction costs, and increase hosting revenue.

Core Scientific hired Weil Gotshal & Manges and financial advisor PJT Partners to help pursue alternative liquidity solutions.

For the quarter, the firm generated revenue of $162.6 million. This was 0.9% lower than in the previous quarter, but net loss for the quarter stood at $861.7 million.

In October, Core Scientific warned that by the end of 2022 it could exhaust its cash and cash equivalents. The company halted the execution of some debt obligations.

The firm does not believe this could lead to a default, but under certain covenants it would raise interest rates, increasing debt service costs. The total debt amounts to about $1.05 billion. Among creditors are the cryptocurrency lending platform BlockFi, investment bank B. Riley, the NYDIG platform, and the Anchor Labs unit.

“The company and its advisers have begun discussions with some of the creditors about potential initiatives. Among possible alternatives the firm may study are debt-management transactions, including swapping existing debt for equity or additional debt,” said Core Scientific.

The company acknowledged that it incurs additional costs due to several lawsuits against it. Among the cases under consideration are investors’ class action, as well as claims from Sphere 3D, a hosting client, and the construction firm McCarthy Building.

Core Scientific is also involved in litigation with its mining unit of the bankrupt Celsius. The debt of one of its largest former hosting clients stands at $5.2 million.

As of October 31, Core Scientific held reserves of 62 BTC and about $32.2 million. The firm has its own Bitcoin hashrate of 13 EH/s. A year ago the figure stood at 2.64 EH/s — a rise of 392%. The firm also operates client equipment totaling about 9.5 EH/s.

Core Scientific shares, on the day the filing was made with the SEC, November 22, plunged 20% in the trading session—from an opening price of $0.17 to $0.134. As of writing, premarket quotes had risen by almost 12%, with the shares partially recovering and trading at $0.15.

As reported in October, bitcoin miners’ aggregate revenue rose only 7% to $589.7 million. In the previous month the figure had fallen by 19%.

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