Bitcoin miner Core Scientific files for Chapter 11 bankruptcy as share value declines by 98%

Following the collapse of FTX, the crypto market’s winter extended, resulting in many companies suffering unparalleled losses. Joining the list is one of the biggest Bitcoin mining companies, Core Scientific, whose ruination impacted the hash rate of the largest cryptocurrency network.

Core Scientific goes down

Bitcoin mining company Core Scientific filed for Chapter 11 bankruptcy on Wednesday. With over 243,000 servers, the company was single-handedly responsible for 10% of the total hash rate. The hash rate is the measurement of the computational power of a network, which in the case of Bitcoin, has declined sharply in the last few days.

Over the last seven days, the Bitcoin hash rate has plunged by 11% after reaching its all-time high earlier last month. The drop in hash rate indicates miners exiting the network, which is a bad sign for the network’s security.

Bitcoin Hash Rate

The exit of miners over the last few months can be attributed to the drop in Bitcoin's value and increased operating costs. Even Core Scientific named falling Bitcoin prices, soaring energy costs and the bankruptcy of Celsius, one of its largest hosting customers, as the reasons behind its bankruptcy.

Core Scientific was one of the few Bitcoin mining companies that went public last year, and in less than two years, its value has been reduced to nothing. Year to date alone, Core Scientific’s (CORZ) shares’ value declined by more than 98% as the trading price fell from $10 to $0.10 in December.

According to court filings, the Bitcoin miner has listed about $1.4 billion worth of assets against $1.33 billion worth of liabilities. However, Core Scientific also stated that it intends to reach a restructuring agreement and continue operating its mining services.

Bitcoin price aims at recovery

Bitcoin price has been oscillating above $16,000 for almost a month now, with the king coin trading at $16,290 at the time of writing. Lurking right at its immediate support level at $16,775, the cryptocurrency is looking to initiate a recovery.

To do so, Bitcoin price will need to mark an 8% rally by breaching its immediate resistance at $17,095. This would allow BTC to tag the critical resistance level at $17,577. Establishing it as a support floor would push the price toward $18,162 and restart the king coin's recovery.

BTC/USD 4-hour chart

Bitcoin price faces the possibility of a price fall if it loses the support at $16,804 and will have the opportunity to bounce off $16,375 and $16,110. However, a daily candlestick below the latter level would invalidate the bullish thesis, resulting in a fall to the monthly lows of $15,655.