Core Scientific to Exit Bankruptcy by September
After last December, the Bitcoin (BTC) miner is now set to finalize a restructuring plan which it expects will net at least a $46 million boost.
In its to the Texas Bankruptcy Court, the miner cites increasing Bitcoin prices, increased hashrate, and decreasing power costs as the reasons for its shift to a new business plan. The bankruptcy filing was necessitated by the prolonged bear market, which caused Bitcoin’s price to plummet and Core Scientific’s stock to decline by 98%.
A Chapter 11 bankruptcy, will still allow a business to operate while its shareholders agree on a suitable plan to reorganize. In this context, Core Scientific says that it is ready to move forward with a new plan and exit from bankruptcy.
Core Scientific, once one of the largest Bitcoin miners, was forced to file for bankruptcy because of the prolonged crypto winter which saw Bitcoin’s price dip to as low as $16,000. This saw Core’s stock plummeting by 98%.
Apart from the crypto winter, there is also the ongoing legal debacle with the which saw Core Scientific being pushed to cut off power supply to the 37,000 mining rigs it hosted for the former. This move came after months of Celsius defaulting on its power bills after its collapse mid-2022, causing Core Scientific to file a motion to reject the contract due to breach of payment.
By terminating the Celsius contract, Core Scientific hopes to generate revenue by renting out the space previously occupied by the mining rigs.
The lack of payments, Core says, indirectly contributed to their liquidity issues which influenced their subsequent filing for bankruptcy. Celsius (or Celsius Network) is also currently under Chapter 11 bankruptcy, which they filed and which saw 2 million investors’ investments go up in smoke.
While Core Scientific hopes that its move towards a new schedule for its bankruptcy exit would work, an underlying concern remains the volatility of Bitcoin itself. The alpha cryptocurrency’s current slump affects miners like Core Scientific, highlighting the challenges they face in maintaining profitability amid price fluctuations.
The declining profitability of Bitcoin mining is another significant factor impacting Core Scientific and other miners. The costs of production, particularly electricity expenses, have risen, while the value of has dropped. Company share prices for the miner have also suffered, with Core Scientific experiencing a substantial decline in its share prices throughout 2022 and Q1 2023. At the time of writing, Bitcoin is trading at the .
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.