Core Scientific has reportedly filed a petition for protection under Chapter 11 of the US bankruptcy code in the state of Texas due to declining bitcoin revenues and prices.
Just days after creditors tried to help Core Scientific, a Bitcoin mining company, escape probable bankruptcy, news emerged confirming the company’s imminent demise.
To preserve stakeholder value for the company, financial services platform B. Riley made a $72 million offer to finance Core Scientific on December 14; of this amount, $42 million would be provided without conditions and the remaining $32 million would be subject to certain requirements.
The decision was made after Core’s valuation fell from $4.3 billion in July 2021 to $78 million at the time of reporting.
Core Scientific was forced to liquidate 9,618 Bitcoin in April to continue business as usual. This was a direct consequence of a prolonged bear market.
The Bitcoin mining company will reportedly file for Chapter 11 bankruptcy on December 21, 2022, according to a CNBC report, which cited a person familiar with the company’s finances as its source.
Even as the company continues to produce positive cash flows, the money is not enough to cover operating expenses, which include the lease payment for 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 appear to be conducting business as usual.
During the time when creditors were willing to extend a helping hand, the company’s stock experienced a momentary rise of around 200%, which has since been followed by a steady decline.
The United States Securities and Exchange Commission received a filing from Core Scientific on October 26 that suggested the company was in precarious financial condition.
According to the firm, the key causes of this situation were low Bitcoin prices, rising energy expenses, an increase in the worldwide Bitcoin hash rate, and a bankruptcy filing by crypto lender Celsius that took down Core Scientific’s obligations.
In an effort to improve the reliability of its cloud services, multinational technology company Microsoft recently implemented a restriction that prevented its cloud customers from mining cryptocurrency.