Core Scientific to File for Chapter 11 Bankruptcy in Texas

After every effort put in place to avoid the unspeakable, it seems Bitcoin (BTC) miner Core Scientific may be filing for bankruptcy protection.

Due to plummeting revenue and low BTC prices, it has been reported that Core Scientific is filing for Chapter 11 bankruptcy in Texas. Notably, the BTC miner is still generating income, however, it is not sufficient to cover the operational costs.

Based on a filing with the United States Securities and Exchange Commission (SEC), most of Core Scientific’s financial burdens come from increased electricity costs, an increase in the global Bitcoin hash rate, exposure to bankrupt Celsius Network as well as the falling price of BTC. Therefore, talks about bankruptcy have been ongoing for a long while now.

B.Riley Attempts to Assist Core Scientific

Less than a week ago, crypto lender and investment firm, B. Riley offered to finance the operations of Core Scientific up to the tune of $72 million to avoid a looming bankruptcy.

B. Riley claimed that the mining facility need not file for bankruptcy protection which was value destructive and potentially unnecessary. Additionally, it cited that there were other viable options like an open discussion with its creditors. 

“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” and this influenced its decision to restructure Core Scientific’s debt and at the same time provide liquidity.

Not considering its outstanding $42 million loan with Core Scientific, B. Riley decided that this time around, the conditions would be more favorable to the miner.

The $72 million non-cash financing was to be given in two phases, $40 million with no contingencies and the other $32 million with certain conditions. Shortly after B.Riley indicated its interest to help the troubled miner, its stocks jumped up to 200%.

However, the euphoria was short-lived as the stock has seen a steady decline. Amidst the bankruptcy, the company plans to not liquidate but continue its mining operations. As of Tuesday, it was recorded that Core Scientific’s market cap has plunged from $4.3 billion in 2021 to $78 million.