Key Takeaways
- The loan comes from a group of creditors who hold over 50% of Core Scientific’s convertible notes.
- The DIP Loan will carry a 10% per annum interest rate.
Bankrupt Bitcoin miner Core Scientific has received interim court approval to access a $37.5 million loan from existing creditors to navigate the liquidity crisis. This comes a day after Core Scientific filed for bankruptcy, citing lumping bitcoin prices, rising energy costs for bitcoin mining, and a $7 million unpaid debt from defunct crypto lender Celsius Network.
According to court documents, the loan comes from a group of creditors who hold over 50% of Core Scientific’s convertible notes, which agreed to provide a debtor-in-possession (DIP) loan up to a total of $75 million. The DIP Loan will carry a 10% per annum interest rate. Reportedly, the firm plans to access the remaining $37.5 Million in January next year.
In the first DIP budget, however, the firm planned to apply for $12.5 million by January 21. In an official statement, Core Scientific has stated that it plans to “move swiftly through the restructuring process” and also maintain its self-mining and hosting operations.
The Bitcoin Mining Industry has had a very challenging year. Core Scientific, one of the leading BTC Miners in the third quarter, recorded revenue of $162.6 million and a loss of $434.8 million. In October, Core Scientific revealed its cash reserves were on the verge of depletion. The crypto miner stated that it spent $15.5 million on debt interest payments and $49.5 million on debt principal payments last quarter.
Bitcoin Miners, who raised a staggering $4 billion from mining-equipment financing when profit margins were as high as 90%, are now defaulting on loans and are on the verge of bankruptcy. Apart from Core Scientific, several other mining firms have resorted to filing for bankruptcy in recent months.
Earlier this year, Compute North– one of the largest operators of crypto-mining data centers, filed for Chapter 11 bankruptcy in Texas. Compute North owes as much as $500 million to a minimum of 200 creditors.
In June, Canada-based BTC miner Bitfarms offloaded $62 million of its BTC to reduce its debts and maintain liquidity. Another struggling crypto miner, Argo Blockchain, is currently in talks to sell some of its assets and also carry out an equipment financing transaction to improve its liquidity.
