After a string of bad news in 2022, the miner has been offered a lifeline that could see it through the current crypto winter.
Shares in mining company Core Scientific have risen nearly 200% in the past four days after a financing proposal was granted Dec. 14 by a current creditor in hopes the company could avoid bankruptcy.
Shares of the embattled miner were trading at just over 13 cents on December 12, before climbing to nearly 40 cents at the close on December 15, a gain of 198%.
A five-day chart showing Core Scientific’s stock price on the Nasdaq. Source: Trading View
According to financial media Marketbeat, traders bought 6,572 call options on Dec. 15, up 136% from the average volume of 2,780, suggesting many are bullish on the stock and betting the price will continue to increase.
Some members of the Bitcoin community have also bought shares, hoping for a huge return if the funding plan materializes and the company can weather the bear market.
The rally could be the start of a trend reversal or just a dead cat bounce. Core Scientific has been hit with a slew of bad news throughout 2022, and despite recent gains, the stock is still down 95% from where it started the year.
On December 14, financial services platform B. Riley wrote a letter to major shareholders and lenders detailing a $72 million funding plan.
If the deal goes through, the first $40 million would be funded “immediately with no contingencies,” while the rest of the funds would be spent if Core agrees to suspend payments to equipment lenders until the price of Bitcoin back above $18,500 is – a price of the major cryptocurrency has been trading below since Nov. 9.
B. Riley suggests that the funding will provide Core with operating liquidity for two years, noting that their analyst predicts that at a Bitcoin price of $18,000, the miner can generate annualized profits of around $165 million, with an additional $20 million for every $1,000 prize. to augment.
Related: How Tough Has This Bear Market Been For Bitcoin Mining? Watch the market talks on Cointelegraph
Hard hit by the general market downturn, Core filed a report on Oct. 26 citing a low BTC price, high electricity rates, and bankrupt crypto lender Celsius’ refusal to repay a $2.1 million loan. were cited as reasons why it might default on some of that debt.
The bad news continued on November 22, when the miner admitted in a quarterly report that its cash reserves could be depleted by the end of 2022, and it did not believe it would be able to raise funds. through financing or capital markets given current market conditions.