Core Scientific, a once-prominent Bitcoin miner, is the latest to announce its intention to seek Chapter 11 bankruptcy protection in Texas. After the failure of Sam Bankman-FTX, Fried’s mining industry has been in disarray, and there is still a lack of faith in digital assets.
While not all Bitcoin miners lost money due to the collapse of the crypto exchange, many are facing financial ruin due to the recent turn of events and the resulting price slump.
JUST IN: #Bitcoin mining giant Core Scientific $CORZ to file for bankruptcy.
— Watcher.Guru (@WatcherGuru) December 21, 2022
Chaos at its Core
At the close of trading on Tuesday, CNBC reported that Core Scientific’s market worth had dropped to $78 million from a high of $4.3 billion in July when the business first listed on the Nasdaq as a SPAC. Its share price dropped by more than 98% last year. The firm has good cash flow but is insufficient to cover the equipment lease financing it has accrued.
JUST IN – Worlds largest #Bitcoin miner Core Scientific stock is down over 70% today. pic.twitter.com/t6MhyH3DWG
— Bitcoin Magazine (@BitcoinMagazine) October 27, 2022
Strategies to Avoid Insolvency
One of Core Scientific’s most important lenders, B Riley, recently made an offer of $72 million to help keep the company out of bankruptcy. With more than two years to profit, the investment bank presented a fresh financing strategy, including distributing non-cash pay money on attractive conditions.
B Riley has said that Core’s problems stem mostly from internal factors and may be resolved with an open, transparent conversation and continued involvement with its creditors and equity holders.
Core’s $42 million loan with B Riley is now due. With “zero contingencies,” the bank said it was ready to immediately finance the first $40 million of the new loan. Until the Bitcoin price returns to $18,500, the balance of the projected finance cannot be pay in principle to the lenders of the necessary equipment.
In addition to Core Scientific, another major player in the sector, Compute North, which provided hosting for cryptocurrency mining, declared bankruptcy in September.
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