Core Scientific Gets Much-Needed Line of Credit to Cushion Bankruptcy
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BlackRock Inc., the biggest asset manager in the world, has given the bankrupt Bitcoin miner Core Scientific a $17 million loan to keep it afloat while it files for bankruptcy. The loan represents a portion of the $37.5 million court-approved loan for the insolvent miner.
According to a December 22 SEC filing, BlackRock and other lenders concurred to offer the BTC miner a debtor-in-possession (DIP) facility commitment loan of around $75 million.
However, just $37.5 million of the loan was granted. The financing comes from creditors who already own the company’s convertible notes, according to court records. BlackRock owns a portion of the convertible notes issued by Core Scientific, valued at $550 million, just like the other lenders.
Core Scientific to Apply for More in January
According to Reuters, Core Scientific intends to apply for the last $37.5 million of the DIP loan this month. According to court documents, the loan carries a 10% annual interest rate.
According to Kris Hansen, a creditor’s representative, the loan was an indication of confidence in the insolvent company. It is a belief in the system, according to Hansen, despite the recent difficulties and sharp decline in the value of Bitcoin.
The loan is anticipated to help Core Scientific survive its bankruptcy. On December 21, the company declared Chapter 11 bankruptcy, citing poor market conditions.
Bitcoin Miners Outlook for 2023 Shaky
Due to the bad market environment and the coin’s increasing mining complexity, bitcoin miners experienced significant difficulties in 2022. According to sources, the profitability and hashrate of Bitcoin mining fell precipitously in 2022.
The founder of Capriole Fund, Charles Edward, commented on the situation, stating that “this is by far the most brutal Bitcoin miner capitulation since 2016 and possibly ever. Hash Ribbons capitulation has captured the lowest Bitcoin hash rate reading of 2022 as miners bankrupt and default under the great pressure of squeezed margins globally.”
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