Shares of Bitcoin (BTC) miner Core Scientific are up nearly 200% over the past four days after a funding proposal from a current creditor hoping the company can avoid bankruptcy was welcomed on Dec. 14.
Shares of the embattled miner were trading at just over 13 cents on Dec. 12, before climbing to nearly 40 cents at the close on Dec. 15 — a 198% gain.
A five-day chart showing Core Scientific’s share price on the Nasdaq. Source: TradingView
According to financial media outlet Marketbeat, traders purchased 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 that the price will continue to rise.
Some members of the bitcoin community also bought shares, hoping for a huge return if the funding plan goes through and the company can weather the bear market.
Bought a portion $CORZ at the end. If the funding pulls through and they can survive the bear market, this trade could become an absolute MONSTER. DYOR. For reference: pic.twitter.com/eHF4NXjcvH
— CR (@CashRocket) December 14, 2022
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 Dec. 14, financial services platform B. Riley wrote a letter to Core 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 remainder of the funds would be spent if Core agrees to suspend payments to equipment lenders until Bitcoin’s price returns above $18,500 is – a price of the leading cryptocurrency has been trading below since Nov. 9.
B. Riley suggests that the funding will provide Core with operating cash for two years, noting that their analyst predicts that at a Bitcoin price of $18,000, the miner can generate annualized profits of about $165 million, with an additional $20 million for every $1,000 price increase.
Related: How tough has this bear market been for bitcoin mining? Watch Market Talks on Cointelegraph
Hit hard by the broader market downturn, Core filed a report on Oct. 26 citing a low BTC price, high electricity tariffs and bankrupt crypto lender Celsius’ refusal to repay a $2.1 million loan. were cited as reasons why he might default on some of that debt.
The bad news continued on Nov. 22, when the miner admitted in a quarterly report that its cash reserves could be depleted by the end of 2022, and it didn’t think it would be able to raise funds through financing or capital markets given the current market conditions.