Key Takeaways
- The BTC miner is “seeking to build as much consensus as possible” about how it would emerge after its bankruptcy proceedings.
- According to the bankruptcy plan, holders of approved debtor-in-possession claims will receive total compensation.
Core Scientific, a prominent BTC miner, has recently filed for a Chapter 11 bankruptcy plan, unveiling its aims for emerging from the financial crisis. After negotiations with key stakeholders, the bankruptcy plan was submitted to the United States Bankruptcy Court for the Southern District of Texas Houston Division. The company aims to gather consensus on its future direction post-bankruptcy.
Despite its financial struggles, Core Scientific has experienced a surge in liquidity since initiating the bankruptcy proceedings. The firm attributes this improvement to several factors, including the rising value of Bitcoin, an increased network hash rate, and reduced energy costs.
Bolstered by these positive developments, the company is now focused on revamping its business plan to ensure a successful comeback. According to the bankruptcy plan, holders of approved debtor-in-possession claims will receive full compensation. To support its recovery efforts, Core Scientific secured permission from the bankruptcy court in January 2023 to obtain a loan of up to $70 million from B. Riley, one of its significant creditors. This loan will be used to settle the existing debtor-in-possession financing loan, which was also provided by B. Riley.
The financial troubles faced by Core Scientific first came to light in October. The company’s bankruptcy filing on December 21, 2022, was a result of declining revenue caused by the low prices of BTC at the time. Even while the miner was navigating its way through Chapter 11 bankruptcy, Core Scientific managed to signed contracts to host almost 18,000 bitcoin (BTC) mining rigs with three firms.
In March, Core Scientific’s Bankruptcy Judge approved the transfer of more than $20M of equipment to its exclusive energy negotiator. With Core Scientific’s bankruptcy plan now disclosed, the company is determined to rebuild and regain its position in the market. By capitalizing on favorable market conditions and implementing a revamped business strategy, the firm aims to emerge from bankruptcy stronger than before.
Even before the Bankruptcy announcement of Core Scientific, Compute North-another prominent BTC miner filed for bankruptcy protection in September 2022, citing its inability to meet its debt obligations.
