Core Scientific, according to reports, has filed a petition under Chapter 11 of U.S. Bankruptcy Code in Texas to obtain protection due to falling revenues and bitcoin prices.
Core Scientific, a Bitcoin mining firm, was nearly bankrupted by creditors just a few days before news broke that confirmed the company’s imminent demise.
B. Riley, a financial platform, offered to finance Core Scientific for $72 million on December 14. Core Scientific would receive $42 million without conditions and $32 million subject to certain conditions. This was in order to preserve the company’s value to its stakeholders.
Core was valued at $78 million in the reporting period, down from $4.3 billion in July 2021.
Core Scientific had to sell 9,618 Bitcoin in April for its continued business. This was the direct result of a prolonged bearish market.
According to CNBC, the Bitcoin mining company will file Chapter 11 bankruptcy on December 21st, 2022. This report cites a source who is familiar with the company’s finances.
Even though the company is still producing positive cashflows it isn’t enough to cover operational expenses, such as the repayment of the lease for the Bitcoin mining equipment.
Core Scientific doesn’t appear to want to end its mining operations, and will continue as normal.
The company’s shares experienced a temporary increase of around 200% during the period that creditors offered a helping hand. This has been followed by a steady decrease.
On October 26, Core Scientific filed a report to the United States Securities and Exchange Commission indicating that the company was in a difficult financial situation.
According to the firm’s analysis, the major causes for this situation were low Bitcoin prices and rising power expenses, as well as a rise in global Bitcoin hash rates. A bankruptcy filing by Celsius, a cryptocurrency lender Celsius, was also cited. This bankruptcy erased Core Scientific’s obligations.
Microsoft, a multinational technology company, recently implemented a restriction to prevent cloud customers from mining cryptocurrency in an effort improve cloud service reliability.
