Financial services platform B. Riley has offered Bitcoin (BTC) miner Core Scientific $72 million in funding to avoid bankruptcy and preserve value for Core Scientific’s stakeholders.
B. Riley, a top lender to Core Scientific with $42 million in loans currently outstanding, detailed the terms of the financing agreement in a Dec. 14 letter, noting that it was ready to pay the first $40 million -dollars to fund “immediately and without contingency”.
The financial platform suggested that the remaining $32 million would be conditional on the BTC miner suspending all payments to equipment lenders while bitcoin prices are below $18,500.
The last time Bitcoin’s price was above $18,500 was on November 9 before falling over 14% in one day.
B. Riley’s assessment of the predicament in which Core Scientific finds itself was scathing, suggesting that it had employed “an aggressive, ill-conceived strategy.” […] continue to expand power plants and expand miners without selling bitcoin and never hedging prices.”
It noted that this approach forced Core Scientific to sell 9,618 BTC in April at a value of $362 million, representing a significant loss for the miner.
Related: Nasdaq warns bitcoin mining company Bitfarms of price drop
Core Scientific admitted in an earnings report filed Nov. 22 that it doesn’t have enough cash to get through 2023. It also said it had doubts about its ability to raise funds through financing or capital markets.
In an Oct. 26 filing, the company cited Bitcoin’s low price, rising electricity costs, and bankrupt crypto lender Celsius’ refusal to repay a $2.1 million loan as reasons for its financial woes.
B. Riley expressed confidence that Core Scientific would accept the funding offer and reminded the miner of his responsibility to shareholders, noting:
“In our view, to authorize a Chapter 11 filing would be a gross breach of the fiduciary duties owed by the Board and management to these trustees — who must put our interests ahead of their own.”
Since the beginning of 2022, Core Scientific’s share price has fallen 97.7% from $11.02 to $0.25.
A one-year chart showing Core Scientific’s share price on the Nasdaq. Source: TradingView
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.