The publicly traded miner filed for Chapter 11 at Southern District of Texas bankruptcy court.

Core Scientific (CORZ), one of the largest bitcoin miners by computing power, filed for bankruptcy as the crypto winter continues to take its toll on the industry.

The company filed for Chapter 11 at Southern District of Texas bankruptcy court. The miner’s estimated liabilities are between $1 billion- $10 billion, according to the filing. It has around 1,000-5,000 creditors, with the largest unsecured claim coming from investment bank B. Riley.

The miner’s estimated assets are between $1 billion – $10 billion, according to the filing.

The bankruptcy of Core Scientific, which accounts for about 10% of computing power on the bitcoin network, operating 143,000 mining runs and hosting another 100,000 is the biggest one yet and is set to send shockwaves in an already crumbling industry.

The company first warned of the risk of bankruptcy in late October, and said it wouldn’t be paying some of its loan installments, sending its shares plummeting about 80% on Nasdaq. In November, it reiterated that it may run out of money by the end of this year. The miner has been in talks to restructure its debt and raise capital, which appear to have failed.

Last week, investment bank B. Riley proposed a $72 million financing plan, including $40 million of financing “immediately” and with “zero contingencies.” However, the rest of the funding would be made available once bitcoin hit $18,500. Core Scientific has $42 million outsanding to the bank.

Core Scientific is one of several miners struggling to keep afloat as rising energy prices increase costs, while stubbornly low bitcoin prices slash revenues. Compute North, another major firm in the space, filed for Chapter 11 bankruptcy in late September. The bankruptcy of Core Scientific

Iris Energy (IREN) had to unplug about 72% of its computing power that was tied to just over $100 million of loans that it defaulted on. The loans were held by special-purpose non-recourse vehicles. Argo Blockchain (ARBK). Greenidge Generation (GREE) yesterday announced a debt restructuring deal with its lender NYDIG, but could still run out of cash in two months if it doesn’t secure additional funding.

Core Scientific has also been affected by the bankruptcy of lender Celsius’s mining arm, one of its biggest clients, and lender BlockFi, to which it ows $54 million. Celsius Mining filed for Chapter 11 bankruptcy in July, and in September sued Core Scientific claiming that it violated automatic stay terms. Core Scientific claims Celsius owes it $5.2 million as of Sept. 30. BlockFi filed for Chapter 11 in late November, one of many victims of crypto exchange FTX’s implosion.

Core Scientific was running 243,000 machines in its facilities as of the end of October, split between 14.4 exahash per second (EH/s) of bitcoin self-mining hashrate, and 10 EH/s of hosted machines for other firms, according to the filing. That’s about 10% of the global hashrate, which stands at around 243 EH/s as of the time of writing.

The company went public in Jan. 20 after merging with Power & Digital Infrastructure Acquisition in a special purpose acquisition company (SPAC) transaction.

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Bitcoin miners are stepping up production as the weather cools down, so the network automatically adjusted to increase the difficulty of mining a block.

The difficulty of mining a bitcoin block increased by 9.26% on Wednesday, making it this year’s second-biggest increase, which is likely to result in narrower profit margins for the industry.

The metric adjusts automatically to keep the time required to mine a bitcoin block to roughly around 10 minutes, depending on the amount of computing power on the network. The higher the hashrate, the higher the difficulty, which lowers miners’ profitability. Earlier this summer, miners across the U.S. and in Texas, a hub for the industry, were curtailing their operations to cope with heatwaves, which contributed to lower difficulty and network hashrate.

Today, the difficulty reached 30.97 trillion, as the hashrate hovered over 230 exahash per second (EH/s), according to data from CoinWarz. The difficulty level is just under its all-time high in May of 31.25 trillion, according to data from mining pool BTC.com.

As the difficulty increases, miners’ profit margins get squeezed, since they are less likely to successfully mine a block and reap the rewards. Miners were already feeling the squeeze this year as the price of bitcoin fell more than 50% this year, power prices (a major cost for the miners) increased and raising capital has become very expensive. The increase in difficulty could add more to the miners’ woes.

Shares of some of the largest publicly traded bitcoin miners, including Core Scientific (CORZ), Marathon Digital (MARA) and Riot Blockchain (RIOT) have already fallen more than 60% this year.

The hashprice, a metric coined by mining services firm Luxor Technologies that measures revenue per terahash of computing power, has dropped dramatically in the last month and particularly in the past few hours, following the difficulty adjustment. In the month of August, revenue in U.S. dollars per terahash dropped by about 24%, whereas on Wednesday, the hashprice fell by 8%.

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The deal with Houston-based Lancium will give CleanSpark a mining hashrate of 16 EH/s by spring 2023.

Bitcoin miner CleanSpark (CLSK) announced a deal with energy technology company Lancium to secure an initial 200 megawatts (MW) at Lancium’s renewable-powered West Texas datacenters, with an option for an additional 300MW in the future.

CleanSpark expects about 50MW of the purchased capacity to be operational by the end of this year, with the remaining 150MW to be fully online during spring 2023, the company said in a statement. At full deployment of the 200MW power capacity, the miner’s hashrate is expected to be 16 exahash per second (EH/s), or quadruple previous guidance for year-end 2022.

In comparison, Core Scientific (CORZ), the largest publicly traded bitcoin miner by hashrate, expects its year-end mining capacity to reach 40 EH/s-42 EH/s. Meanwhile, Marathon Digital (MARA) sees its hashrate at approximately 23.3 EH/s by early 2023, and Riot Blockchain (RIOT) anticipates hitting 12.8 EH/s by the end of 2022.

CleanSpark’s stock has been a sizable outperformer in 2022, gaining 30% versus declines of 22% for Core Scientific, 10% for Marathon and 1% for Riot.

“We continue to build more capacity at our own bitcoin mining facilities while we partner with colocation service providers,” said CleanSpark’s CEO Zach Bradford in the statement. “This hybrid approach helps us ensure that we always have rackspace ready to deploy new machines when they are delivered to us by the manufacturers,” he added.

Lancium and its “Clean Campuses” made for an “ideal” partner for CleanSpark, continued Bradford, whose company has a goal to use 100% renewable energy. “Lancium’s facilities are best-in-class, scalable and, importantly, draw their power from renewable-rich West Texas.”

CleanSpark currently has three operating locations that use more than 95% sustainable power sources, including solar, wind, hydro and nuclear, according to a recent presentation.

Houston-based Lancium last November raised $150 million in financing led by clean energy provider Hanwha Solutions. The company’s Clean Campus data centers will host bitcoin mining, high throughput computing and other energy intensive applications, while providing power management services.

Lancium’s proprietary “Smart Response” software allows these campuses to function as large power stations in reverse, absorbing renewable energy while providing grid ancillary services and helping manage the power flow more efficiently.

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The trading platform worked with Compass Mining for several months before launching the product.

Pipe, a trading platform and technology company that was valued at $2 billion last year, is launching an alternative financing product for bitcoin mining hardware and hosting companies with recurring revenue.

The program, called “mine now, pay later,” will work as an alternative to traditional means of financing such as equity or debt, which are expensive for the companies and their shareholders.

“We’ve created a trading platform that allows companies to sell recurring revenue stream generating products and services to institutional investors,” Harry Hurst, co-founder and co-CEO of Pipe, said in an interview with CoinDesk.

The buyers of these contracts are institutional investors, including banks, hedge funds, pension funds and family offices, that have a fixed-income mandate and are looking for recurring payout generating assets, Hurst said.

A company signs contracts with its customers for a recurring payment schedule, and then puts those contracts into Pipe’s platform for trading, where investors will buy the contracts. In turn, the transaction becomes an instant source of funding for the company, which it can use to fund its growth without diluting the shareholders by offering equity or locking in an expensive debt facility.

“The financing solution is a little bit like hardware financing, but much more efficient because it’s on a trading platform and diversified,” Hurst explained.

Pipe earns a fee on trades that get executed through its platform. The trade fee is up to 1% and varies depending on the trading volume, Hurst said.

Pipe has been working for several months with bitcoin mining service provider Compass Mining, which is the first company to broadly offer this new form of financing.

The funding alternative comes as cryptocurrency and broader markets have retreated from their peaks last year, damping euphoria among investors and making access to capital via traditional means harder and more expensive for bitcoin mining companies.

“Together with Pipe, we are accelerating the growth of bitcoin mining by democratizing access to the critical financing options that traditional banking institutions have ignored,” Compass Mining CEO Whit Gibbs said in a statement.

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