Giant Bitcoin Miner Core Scientific Files For Bankruptcy

In order to continue operating, Core Scientific had to liquidate 9,618 BTC in April as a direct consequence of a protracted bear market. Now, the giant Bitcoin miner Core Scientific has filed for bankruptcy.

Giant Bitcoin Miner Core Scientific Files For Bankruptcy

Update (0925ET): Core Scientific, a Nasdaq-listed company, filed for bankruptcy in the United States early Wednesday, corroborating late Tuesday rumors that the miner might pursue Chapter 11 protection the following day.

According to the company, the decision was made after “a comprehensive review of potential alternatives and exhaustive discussions with various company stakeholders.”

Core Scientific also stated that it expects to embark into a restructuring assistance agreement with the Ad Hoc Noteholder Group, which represents more than 50% of its convertible note holders.

“The filing of these cases was necessitated by a decline in the Company’s operating performance and liquidity suffering from the prolonged decrease in the price of bitcoin, the increase in electricity costs necessary to power the Company’s data centers, and the failure by certain of its hosting customers to honor their payment obligations,” per the statement.

“In response to these factors, the Company has actively taken steps to decrease monthly costs, delay construction expenses, reduce and delay capital expenditures and increase hosting profitability.”

Core Scientific has stated that it is “committed to operating normally” as it goes “swiftly through the process” of reorganization.

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“During this process and upon emergence, the Company will continue to operate its existing self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis,” per the statement.

“The Company remains dedicated to providing hosting services and self-mining in its state-of-the-art data centers.”

As CoinTelegraph’s Arijit Sarkar previously reported, news have emerged confirming Core Scientific’s demise just days after a creditor offered to assist the Bitcoin mining company in avoiding bankruptcy. Core Scientific is said to be filing for Chapter 11 bankruptcy in Texas due to declining revenue and low BTC pricing.

To sustain value for stakeholders, financial services platform B. Riley provided Core Scientific $72 million in non-cash financing on December 14 – $40 million with no contingencies and $32 million with conditions. Core’s valuation decreased from $4.3 billion in July 2021 to $78 million at the time of reporting, prompting the decision.

In order to continue operating, Core Scientific had to liquidate 9,618 BTC in April as a direct consequence of a protracted bear market. According to a source acquainted with the business’ finances who was quoted in a CNBC report, the Bitcoin mining company would declare bankruptcy early on December 21.

Even though the business continues to have positive cashflows, the earnings are insufficient to satisfy the operational expenses, including the cost of leasing new equipment for Bitcoin mining.

According to the article, Core Scientific has no plans to liquidate and will keep operating its mining operations. The company’s stock briefly increased by almost 200% when B. Riley offered a helping hand, but has subsequently been steadily declining.

Giant Bitcoin Miner Core Scientific Files For Bankruptcy
Core Scientific’s share price movement on Nasdaq.

Financial hardship was disclosed in a Core Scientific filing with the US Securities and Exchange Commission on October 26. The main causes of this scenario, according to the company, were low Bitcoin prices, rising electricity costs, a rise in the world’s hash rate for Bitcoin, and the bankruptcy of cryptocurrency lender Celsius, which erased Core Scientific’s debts.

According to its bankruptcy filing, Celsius owes its customers roughly $4.7 billion, and its balance sheet has a hole of about $1.2 billion. Let’s take a look inside of Celsius’ $25 billion bankruptcy filing.

In an effort to improve the stability of its cloud services, tech giant Microsoft has prohibited its cloud users from mining cryptocurrency.

Microsoft changed its acceptable usage policy on December 1 to make it abundantly clear that “mining cryptocurrency is prohibited without prior Microsoft approval,” as Cointelegraph reported.

The company claimed that its goal was to safeguard clients by lowering the possibility of service interruptions or degradations in the Microsoft Cloud.

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