Core Scientific nears bankruptcy exit, plans for January

Core Scientific, one of the largest US publicly traded crypto mining companies, said it anticipates exiting bankruptcy proceedings by mid-to-late January. This comes a year after the firm filed for bankruptcy amidst a downturn in the crypto market.

CEO Adam Sullivan announced that the company has reached a tentative agreement with key stakeholders, which should pave the way for its exit from Chapter 11 bankruptcy next month. Core Scientific filed for bankruptcy in December last year, affected by falling bitcoin prices, increased energy costs for mining, and unpaid debts from bankrupt lender Celsius Network.

The broader crypto sector experienced massive losses last year, with over a trillion dollars in value wiped out. This downturn saw the collapse of major entities like crypto hedge fund Three Arrows Capital and Voyager. The bankruptcy of FTX, once the world’s second largest crypto exchange, in November 2022 further intensified regulatory scrutiny of the crypto industry.

Core Scientific’s plans include a rescheduled confirmation hearing on January 10 and proposals to modify key dates in its bankruptcy proceedings. The business of mining bitcoin, involving solving complex mathematical puzzles with powerful computers, became less profitable due to the drop in bitcoin’s price and rising energy costs.

After going public in mid-2021 through a merger valued at $4.3 billion, Core Scientific was delisted following its bankruptcy proceedings. Despite selling nearly all its bitcoin in June, the Austin-based miner, which has operations in North Dakota, North Carolina, Georgia, and Kentucky, was down to less than $30 million in cash.

However, the company now plans to emerge with a restructured financial framework. According to a recent announcement, Core Scientific will issue new shares and convertible notes to shareholders and noteholders as part of its restructuring plan, aiming for a relisting on the NASDAQ exchange.

The plan involves exchanging old shares for new ones at a 25:1 ratio and compensating noteholders with a higher value than the face value of their notes. Post-bankruptcy, Core Scientific will have $709 million in net debt and $791 million in shareholder equity. The company has also made a deal with Bitmain for new mining rigs and currently operates over 199,000 ASICs, mining approximately 32 Bitcoins daily.