Bitcoin Mining Company Core Scientific Files Chapter 11 Bankruptcy
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Amidst declining cryptocurrency markets and rising energy prices, Core Scientific Inc., one of the largest bitcoin mining firms by mining power, filed for Chapter 11 bankruptcy protection in Texas today.
JUST IN: #Bitcoin mining giant Core Scientific $CORZ to file for bankruptcy.
— Watcher.Guru (@WatcherGuru) December 21, 2022
Core Scientific is a cryptocurrency mining firm that specializes in “proof-of-work” compute mining for cryptocurrencies such as bitcoin. In order to safeguard blockchain networks and produce new cryptocurrency tokens, the corporation operates banks of advanced computing equipment. The procedure makes heavy use of electricity and expensive machinery.
The company claims that it is still mining bitcoin and that it will keep running its customer hosting services, which are generating positive cash flows on a debt-free basis. However, this isn’t enough to cover the company’s equipment leases and other operating expenses, a source familiar with the filing told CNBC.
Core Scientific Accounts for 10% of All Bitcoin Mining Computing Power
In Texas, North Dakota, North Carolina, Georgia, and Kentucky, the corporation operates mines. Nearly 143,000 mining machines are run by Core Scientific, which accounts for almost 10% of the network’s total computing power. More than 100,000 servers are housed in its data centers.
Numerous industry participants have declared bankruptcy as a result of recent market conditions, including cryptocurrency lender Celsius Network, which did so in July. Due to its insolvency, Core Scientific’s client Celsius was unable to repay the miner for its debts.
Core Scientific has reached a deal with some of its creditors in a prepackaged bankruptcy in order to restructure itself. In this type of bankruptcy, Core Scientific, the debtor, negotiates a settlement before formally declaring bankruptcy.
The miner anticipates restructuring assistance from more than “50% of the holders of its convertible notes,” who will make pledges of $56 million and up to $19 million extra to support the business through “debtor-in-possession” arrangements. According to the company, this money as well as cash from existing operations would be applied to the next restructuring.
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