Bitcoin Miner Basic Science Files for Bankruptcy: Report

Once a prominent Bitcoin miner – Core Scientific – is the latest to plan to file for Chapter 11 bankruptcy protection in Texas.

Mining companies are experiencing turmoil and a prolonged crisis of confidence in digital assets in the wake of the collapse of Sam Bankman-Fried’s FTX. While bitcoin miners may not have been directly exposed to the now crashing cryptocurrency exchange, the subsequent turn of events and subsequent price crash threatens more of them with bankruptcy.

underlying disorders

According to a CNBC report, Core Scientific’s market value fell to $78 million at the close of trading Tuesday, down from a valuation of $4.3 billion last July since listing on Nasdaq through a special purpose acquisition company, or SPAC.

Over the past year, inventory value has declined by more than 98%. Although it generated positive cash flow, the cash and cash equivalents are not enough for the company to pay off the financing debt on the equipment it leased. The company is not planning any liquidation, but will continue to operate normally instead.

Sources familiar with the company’s finances expect it to reach an agreement with major bondholders, who own most of its debt.

Try to avoid bankruptcy

As a result of the distress, Core Scientific recently received a $72 million bid to avoid bankruptcy from one of its primary lenders – B Riley. The investment bank proposed a new financing plan, which included providing lump sum funds with a path of more than two years on favorable terms for the company to reach profitability.

In a statement, B Riley said the vast majority of issues plaguing Core were self-inflicted and went on to add that they can be rectified in the context of “open and transparent discussion and continued engagement with its creditors and shareholders.”

B Riley already has an outstanding $42 million loan from Core. The bank said it was preparing to fund the first $40 million in new financing immediately, with “zero contingency.” All principal payments to equipment lenders would have to be suspended until the bitcoin price recovers to $18,500 for the remainder of the proposed financing.

Aside from Core Scientific, another prominent company in the space — Compute North — which hosted crypto infrastructure, filed for bankruptcy in September.

Basic Science Post-Bitcoin Miner Bankruptcy Files: Report appeared first on CryptoPotato.

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