Bitcoin Miner Core Scientific Apparently Declares Chapter 11 Bankruptcy
According to reports, Core Scientific has submitted a petition for protection under Chapter 11 of the U.S. bankruptcy code in the state of Texas due to declining revenues and prices of bitcoin.
Only a few days after creditors attempted to help Core Scientific, a Bitcoin mining company, escape probable bankruptcy, news emerged confirming the company’s impending demise.
To preserve the value for the company’s stakeholders, the financial services platform B. Riley made an offer to finance Core Scientific in the amount of $72 million on December 14; of this amount, $42 million would be provided with no conditions attached, and the remaining $32 million would be subject to certain requirements.
The decision was reached after the valuation of Core dropped from $4.3 billion in July 2021 to $78 million at the time the report was made.
Core Scientific was forced to liquidate 9,618 Bitcoin in April in order to continue business as usual. This was a direct consequence of a protracted bear market.
The Bitcoin mining firm will reportedly file for Chapter 11 bankruptcy on December 21, 2022, based on a report by CNBC, which cited a person familiar with the company’s finances as its source.
Even while the firm is still producing positive cashflows, the money is not sufficient to cover the operational expenditures, which include paying back the lease for the Bitcoin mining equipment.
As stated in the article, Core Scientific does not appear to have any intention of winding down its mining activities and will apparently carry them out as usual.
During the time that creditors were willing to extend a helping hand, the company’s shares saw a momentary increase of about 200%, which has since been followed by a consistent decrease.
The United States Securities and Exchange Commission received a filing from Core Scientific on October 26 that suggested the company was in a precarious financial position.
According to the firm, the key causes for this predicament were low Bitcoin prices, rising power expenses, a rise in the worldwide Bitcoin hash rate, and a bankruptcy filing by crypto lender Celsius that wiped off the obligations owing to Core Scientific.
As an effort to improve the reliability of its cloud services, the multinational technology company Microsoft recently implemented a restriction that prevented its cloud customers from mining cryptocurrency.