Crypto miner Core Scientific files for bankruptcy as industry contagion bites
CORE Scientific, one of the biggest publicly traded cryptocurrency mining companies in the United States, said on Wednesday (Dec 21) it filed for Chapter 11 bankruptcy protection, the latest in a string of failures to hit the sector.
The Austin, Texas-based miner said it would not liquidate and would continue to operate normally, as it expects to enter into a restructuring support agreement with its creditors, who represent over 50 per cent of the holders of its convertible notes.
The filing in a Texas court comes as crypto prices have plummeted. After rapid growth in 2020 and 2021, bitcoin – the most popular digital currency by far – is down more than 60 per cent in 2022.
This, year the wider crypto market shrank by US$1.4 trillion, squashed by rising interest rates, vanishing risk appetite and corporate collapses, including Sam Bankman-Fried’s FTX.
In a statement on Wednesday, Core Scientific said its creditors have also agreed to provide up to US$56 million in debtor-in-possession financing.
One of the largest creditors of Core Scientific, B Riley Financial, had offered US$72 million last week to avoid the bitcoin miner’s bankruptcy.
In its bankruptcy petition, Core Scientific said it has US$1 billion to US$10 billion in assets and liabilities, and creditors between 1,000 and 5,000.
Core Scientific went public through a merger with a blank-cheque company backed by BlackRock last year, in a deal that valued the cryptocurrency miner back then at US$4.3 billion.
Bitcoin miners have been under severe pressure as their profitability dropped amid a slump in cryptocurrency prices and soaring energy rates. The extreme market conditions have also led to bankruptcies of other major cryptocurrency lenders such as Celsius Network and Voyager Digital Ltd.
Core Scientific was also impacted by litigation with Celsius Networks and its affiliates.
CNBC first reported about Core Scientific’s bankruptcy plan. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
