The loan would allow Core Scientific to continue operating its mining and hosting operations while reorganizing.
A bankruptcy court in the United States has granted Bitcoin miner Core Scientific interim approval to access a $37.5 million loan from existing creditors to fund its operations in the face of liquidity issues.
Core Scientific is one of the largest cryptocurrency mining companies in the United States, but it declared Chapter 11 bankruptcy on December 21 due to rising energy costs, declining revenue, and a decline in the price of BTC in 2022.
Core Scientific stated in a public statement the same day that it intends to “move swiftly through the restructuring process” while continuing to operate its mining and hosting operations.
According to court filings, the loan comes from a group of creditors who own more than 50% of Core Scientific’s convertible notes and agreed to provide debtor-in-possession (DIP) facility commitment loans totaling $75 million.
The firm’s application was approved on December 22, and court filings indicate that the DIP loan will have a 10% annual interest rate.
Core Scientific will be able to access $37.5 million immediately to keep the lights on, while the remaining $37.5 million will be available in January, according to Reuters, citing a company attorney.
However, the initial DIP budget predicted that Core Scientific would apply for $12.5 million by January 21.
According to the Reuters report, the creditors understand the challenges of the bear market and are considering a long-term partnership with Core Scientific.
Kris Hansen, a creditor representative, told the news outlet that despite the company’s recent problems, existing stakeholders “have faith” in its future.
Core Scientific reported $1.4 billion in assets and $1.33 billion in liabilities as of September 30, indicating a tight balance sheet amid the bull market in its third-quarter financial report.
Notably, the company lost $434.8 million in the third quarter, bringing its total losses this year to $1.71 billion. As a result, the company announced in late November that it would most likely go bankrupt unless it received a fresh infusion of cash.
Core Scientific has reportedly mined nearly 12,000 BTC this year, a significant increase from the 5,769 BTC mined in 2021, but this has not been enough to save the company.