More crypto miners to fall after Core Scientific bankruptcy, say experts

business-standard.com:

US-based listed cryptocurrency mining firm Core Scientific on Wednesday filed for bankruptcy blaming falling Bitcoin prices, rising energy costs and $7 million unpaid debt from crypto lender Celsius Network. Earlier in July, Celsius also filed for bankruptcy. The crypto industry may continue to see a fall of firms amid the ongoing contagion, experts told Business Standard.

In 2022 alone, the shares of Core Scientific have dipped 98 per cent, shrinking its market cap to about $78 million from over $7 billion at the starting of the year.

"Core Scientific is not the only BTC miner that has faced bankruptcy this year. In September, we also saw Compute North filing for bankruptcy," said Edul Patel CEO and co-founder of crypto investment platform Mudrex.

'Bitcoin halving' will be among the primary reasons that may lead to more Bitcoin mining firms shutting down. After every 210,000 blocks mined, every four years, the block reward given to miners is cut in half. This is called Bitcoin Halving.

"With the Bitcoin halving happening every 4 years, the rewards for Bitcoin miners will keep decreasing. Therefore, we are likely to witness several Bitcoin mining organisations shutting shop and moving towards other profitable avenues. That is the way the Bitcoin algorithm was designed," Patel added.

"It may trigger sell-off in the shares of other publicly traded bitcoin mining companies as investors would cut their exposure in these companies," said Deepanshu Bhalla, director at law, regulations and taxation firm The Virtual Compliance.

"Lenders also need to rethink how they evaluate the credit of these mining companies in future," Bhalla added.

Will it impact the crypto market?

"Crypto miners shutting shop has essentially negligible