Core Scientific seeks bankruptcy relief; company intends to keep mining bitcoin to reduce debt

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One of the biggest bitcoin mining operations in the business, Core Scientific, submitted a Chapter 11 bankruptcy petition to the Southern District of Texas on December 21, 2022. The filing states that Core Scientific has between 1,000 and 5,000 creditors and that its assets are worth between $1 billion and $10 billion.

The financial institution B. Riley is the company’s largest unsecured creditor after Core Scientific voluntarily files for Chapter 11 bankruptcy protection.

As the crypto winter has this year caused a wide range of businesses to tremble, another cryptocurrency company has applied for bankruptcy protection. One of the biggest bitcoin mining companies, Core Scientific (Nasdaq: CORZ), filed for bankruptcy in Texas on Wednesday.

According to the filing, Core Scientific has assets between $1 and $10 billion and liabilities between $1 and $10 billion. The financial institution B. Riley is the biggest creditor, along with 1,000–5,000 additional creditors, according to Core Scientific.

Core Scientific is one of many cryptocurrency mining companies that have struggled financially this year and has joined a long list of crypto companies that have sought bankruptcy protection this year. For instance, Compute North filed for Chapter 11 bankruptcy protection in late September 2022.

Bitcoin mining companies like Argo Blockchain, Iris Energy, and Greenidge Generation are experiencing financial difficulties. On December 20, Greenidge was able to reach a restructuring agreement with NYDIG, but the company’s financial situation indicates that voluntary bankruptcy is still a possibility.

The filing states that Core Scientific ran nearly 250K machines at a hashrate of about 24.4 exahashes per second (EH/s). Dalton Utilities, Shell Energy Solutions, U.S. Customs and Border Patrol, Duke Energy, Amazon Web Services Inc., DK Construction Company, and Liveview Technologies are a few of the other creditors of Core Scientific in addition to B. Riley.

Additionally, the company holds equity stakes in subsidiaries like American Property Acquisition, Radar Relay, and Starboard Capital. Todd DuChene, the president of Core Scientific, filed the Chapter 11 petition.

According to a source familiar with the situation who spoke to CNBC on Wednesday, Core Scientific still has a positive cash flow and will keep mining bitcoin to reduce debt. According to the source, the operation will not be liquidated and has plans to reach an agreement with senior security noteholders, according to MacKenzie Sigalos, a contributor to CNBC.

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