Investment bank cum crypto lender B.Riley has offered to finance troubled Bitcoin (BTC) miner Core Scientific with $72 million to avoid an impending bankruptcy. This offering will also preserve value for Core Scientific’s stakeholders.
According to a published statement, B. Riley said;
“In our opinion, the vast majority of Core Scientific’s issues are self-imposed and can be corrected in conjunction with an open, transparent discussion and ongoing participation with its creditors and equity holders” therefore, it plans to “restructure its debt and provide liquidity to avoid a potential unnecessary and value destructive bankruptcy proceeding.”
Markedly, B. Riley is one of the firm’s key and largest creditors. Already, Core Scientific has an outstanding loan worth $42 million with the investment bank.
Although this time around, the $72 million capital would be based on more favorable terms. B.Riley claimed that the option of bankruptcy which Core Scientific was opting for took them by surprise. In its opinion, bankruptcy is not the best option for the BTC miner.
Core Scientific Falls Deep in Debt
After the release of its production and operational updates for June 2022, Core Scientific has been moving slowly.
As of June, the firm claimed to have 1,959 Bitcoins and around $132 million in cash on its balance sheet. Shortly in July, there was a 10% increase in its BTC production. In that same month, Core Scientific mentioned that there was expansion as regards its mining servers.
The next month also had a positive outlook for the Texas-based miner with an increase in its self-mining hashrate.
“Self-mining and colocation activities continued to grow in August. We deployed more than 25,000 new ASIC servers in August, increasing our total hashrate to over 21 EH/s,” Mike Levitt, the business’s Chief Executive Officer (CEO) stated.
Suddenly, the crypto miner became plagued as bankruptcy was looming. The company confessed that it wasn’t sure if it would pull through with the debts it had at hand. Core Scientific mentioned that it did not have enough cash flow to avoid bankruptcy. Almost immediately after the announcement, its share price plummeted by more than 78%.
As it stands, B. Riley is ready to take care of the first $40 million “immediately, with zero contingencies.”