On the 21st of December, Core Scientific, one of the largest Bitcoin miners in the industry, announced that it had filed for Chapter 11 bankruptcy protection in Texas. According to the announcement, despite its bankruptcy proceedings, the miner will continue its operations. It is expected that it will enter into a restructuring support agreement with the Ad Hoc Noteholder Group, which represents above 50% of the holders of its convertible notes.
Ad Hoc Noteholder Group will also supply up to $56 million in financing as part of a debtor-in-possession facility to provide the necessary financing to effectuate the planned restructuring support agreement. This latest news of the bankruptcy of a cryptocurrency miner came during the ongoing bear crypto market, where the price of the largest cryptocurrency by market cap Bitcoin plummeted by more than 60% in just a year.
The high energy prices and the asset’s growing mining difficulty are other reasons for the bankruptcy of Core Scientific. Earlier this week, the mining difficulty increased by more than 3%, which led miners to allocate more resources to produce the same amount of coins as earlier. In July 2021, Core Scientific, an Austin-based Bitcoin miner, announced that it would go public through a special-purpose acquisition vehicle. And in January 2022, the company’s stock was also listed on the Nasdaq.
Since 2022, Core has seen its stock tank by 98%, but the mining company is still generating cash flow. Last year in July, the company’s market capitalization was around $4.3 billion, which yesterday, on the 20th of December, reached $78 million. In October this year, the company had already warned that it could file for possible bankruptcy, claiming that it was exploring several options. After its bankruptcy, Core Scientific will be the first publicly-listed company to file for bankruptcy.
