Core Scientific, a key Bitcoin (BTC) mining firm, has reportedly filed for Chapter 11 bankruptcy shortly after creditors extended a lifeline to the embattled firm.
The company received the protections in Texas, citing poor earnings and plummeting BTC values.
Financial services platform B Riley offered the $72 million non-cash financing bailout to Core Scientific. The deal included zero contingencies and $32 million with stipulations. The news comes after the firm’s value plummeted from $4.3 billion in July last year to $78 million to date.
To remain in operation, Core Scientific sold off 9,618 BTC in April this year. While it can continue with its mining operations, the firm cannot earn enough revenues to cover costs due to operations.
While the company continues to generate positive cashflows, the income is not sufficient to cover the operational costs, which involve repaying the lease for its Bitcoin mining equipment.
The firm previously filed for financial distress with the United States Securities and Exchange Commission (SEC) in late October. The company stated in its filing that high electricity fees, Bitcoin hash rate hikes, and low BTC prices led to the collapse of crypto lending firm Celsius, eliminating the latter’s Core Scientific debts.
Courts ordered Celsius to pay back clients a total of $44 million following its collapse. The news follows an agreement the lending firm reached with stakeholders, stating crypto held in custody accounts belonged to users and not centralised platforms.
