Nov 23, 2022 - Economy

Core Scientific breaks hard from the pack, the wrong way

Data: Yahoo! Finance; Chart: Axios Visuals

Crypto mining stocks have given back a lot over the past 30 days — mainly the ground they won amid the run-up in bitcoin prices — but Core Scientific has been cut down more than others.

Driving the news: With its stock already down 86% in the past month, Core Scientific in a filing Tuesday disclosed $1.7 billion in losses this year through the end of September.

  • Its top two customers, who Core Scientific provided hosting services for, accounted for 40% and 20% of its equipment sales and hosting revenue, the company said.
  • One of them was bankrupt crypto lender Celsius Network.

The big picture: Miners were starting to feel the hurt before Celsius and, more recently, FTX's collapse — caught in the nexus of rising power prices, falling bitcoin prices and tightening capital markets.

  • Marathon Digital Holdings and Riot Blockchain appear to be hanging tough, with their stocks down by 40% and 55%, respectively over that time.

Context: Mining operators rushed to public markets during the last run-up in bitcoin prices, and watched their stock spike in tandem.

  • Core Scientific was the latecomer among them, listing on a U.S. exchange in January after merging with a special purpose acquisition company or SPAC.
  • The company's shares sank in October amid concerns of bankruptcy after it said it couldn't pay back its debts. The miner was also seen selling its entire bitcoin stockpile in July.

The bottom line: It's yet another example of how the stock market is not completely immune to the crypto crunch.

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