Just days after creditors offered to help Core Scientific — a Bitcoin (BTC) mining company — avoid potential bankruptcy, reports emerged confirming the company’s inevitable fate. Core Scientific reportedly filed for Chapter 11 bankruptcy protection in Texas due to falling revenue and BTC prices.
On Dec. 14, financial services platform B. Riley offered to fund Core Scientific with $72 million — $40 million with no contingencies and $32 million with conditions — to preserve stakeholder value. The decision came after Core’s valuation fell from $4.3 billion in July 2021 to $78 million at the time of reporting.
As a direct result of an extended bear market, Core Scientific had to sell 9,618 BTC in April to remain operational. A CNBC report, citing a person familiar with the company’s finances, says the bitcoin mining company will file for Chapter 11 bankruptcy on December 21, 2022.
While the company continues to generate positive cash flows, revenue is insufficient to cover operating expenses, which include paying back rent on its bitcoin mining equipment.
The report also indicates that Core Scientific will continue its mining operations and has no plans to liquidate. While creditors offered their hands, the company’s shares temporarily soared nearly 200%, which has since seen a steady decline.
Core Scientific stock price movement on the Nasdaq. Source: TradingView
On October 26, a Core Scientific filing with the United States Securities and Exchange Commission indicated financial difficulties. According to the company, the main reasons for this situation were low bitcoin prices, increased electricity costs, a surge in the global bitcoin hash rate, and a bankruptcy of crypto lender Celsius, which wiped out debt to Core Scientific.
Core Scientific has not yet responded to Cointelegraph’s request for comment.
Related: Bitcoin miner Greenidge signs $74 million debt restructuring agreement with NYDIG
Tech giant Microsoft recently stopped its cloud users from mining cryptocurrencies to increase the stability of its cloud services.
As Cointelegraph reported, Microsoft updated its acceptable use policy on Dec. 1 to clarify that “cryptocurrency mining without Microsoft’s prior approval is prohibited.”
The company was satisfied with the move, declaring its intention to protect customers by reducing the risk of disruption or degradation of services in the Microsoft cloud.
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