Core Scientific is said to have filed for Chapter 11 bankruptcy in Texas due to declining revenue and BTC prices.
Just days after creditors offered to assist Core Scientific, a Bitcoin mining company, in avoiding bankruptcy, reports emerged confirming the company’s doom. Core Scientific is said to have filed for Chapter 11 bankruptcy in Texas due to declining revenue and BTC prices.
To retain the value for stakeholders, financial services platform B. Riley offered to finance Core Scientific with $72 million — $42 million with no contingencies and $32 million with conditions — on December 14. Core’s valuation fell from $4.3 billion in July 2021 to $78 million at the time of reporting, prompting the decision.
Core Scientific had to sell 9,618 BTC in April to stay operational as a result of an extended bear market. According to a CNBC report citing a person familiar with the company’s finances, the Bitcoin mining company plans to file for Chapter 11 bankruptcy on December 21, 2022.
While the company continues to generate positive cashflows, the earnings are insufficient to cover the operational costs, which include repaying the lease for its Bitcoin mining equipment.
According to the report, Core Scientific will continue to mine and has no plans to liquidate. While creditors extended a helping hand, the company’s stock rose nearly 200% in a single day, but has since fallen steadily.
Core Scientific filed with the US Securities and Exchange Commission on October 26th, indicating financial distress. The primary reasons for this situation, according to the company, were low Bitcoin prices, increased electricity costs, an increase in the global Bitcoin hash rate, and a bankruptcy filed by crypto lender Celsius, which wiped out the debts owed to Core Scientific.
Core Scientific has yet to respond to a request for comment from Cointelegraph.
Microsoft recently prohibited its cloud users from mining cryptocurrencies in order to improve the stability of its cloud services.
According to Cointelegraph, Microsoft updated its acceptable use policy on December 1 to state that “mining cryptocurrency is prohibited without prior Microsoft approval.”
The company justified the move by stating its intention to protect customers by reducing the risks of disrupting or impairing Microsoft Cloud services.
