Bitcoin miner Core Scientific plans to file for Chapter 11 bankruptcy protection in Texas in the early hours of Wednesday morning, according to a CNBC report.
Core Scientific is one of the largest publicly traded cryptocurrency mining companies in the United States. It has decided to declare bankruptcy as a result of falling crypto prices and rising energy prices, which have harmed its finances.
Last week, B.Riley Financial, one of Core Scientific’s largest creditors, sent an open letter to the company’s shareholders and lenders. The financial services platform stated at the time that bankruptcy was unnecessary and proposed a $72 million financial plan.
Furthermore, the company’s health has deteriorated further as a result of the stagnant price of Bitcoin. Despite rising sell pressure, the US-based mining company reduced its holdings by 1576 BTC in September.
Breaking Now:— Elite Crypto (@TheEliteCrypto) December 21, 2022
One of the Largest Public #Bitcoin Mining Giant – @Core_Scientific is set to file for Bankruptcy ❌
The company still generates positive cash flow, and plans to continue mining while repaying debtholders$CORZ is down 98% this year https://t.co/xLclbtQRE3
Core’s market capitalization had dropped to $78 million as of the end of trading Tuesday, down from a $4.3 billion valuation when the company went public via a special purpose acquisition vehicle, or SPAC, in July 2021. CORZ’s stock price has dropped by more than 98% in the last year. The stock closed at $0.21 on Tuesday, up 3.07%.
According to a person familiar with the company’s situation, the company is still generating positive cash flow. However, cash is insufficient to repay the debt owed on the mining equipment leased. Core Scientific will not liquidate or resume normal operations until it has reached an agreement with senior security noteholders, who hold the majority of the company’s debt.
Despite the filing, Core Scientific has decided not to go into liquidation and will continue to operate normally until it can reach an agreement with the senior security noteholders who hold the majority of the company’s debt, according to the source.
Not just Core Scientific, Compute North, which provides hosting services and infrastructure for cryptocurrency mining, declared Chapter 11 bankruptcy in September, and another miner, Marathon Digital Holdings, reported an $80 million exposure to Compute North.