Core Scientific, a blockchain firm that provides solutions for businesses, including Bitcoin mining services has announced that it is filing for Chapter 11 bankruptcy protection as a result of the firm’s dwindling income and low prices of Bitcoin (BTC) in the crypto market.
According to a report from CNBC, the mining firm still has a positive cash flow but is not sufficient to pay for mining equipment and high prices of electricity. Additionally, a person familiar with the matter stated that the firm will continue with its mining operations while reaching an agreement with senior security noteholders – who hold the majority of the company’s debt.
The Bitcoin miner had previously issued warnings to its investors in an earlier report, stating that there is a possibility for the company to file for bankruptcy. The firm stated that its stocks were down by 77%. The company also stated that it will miss debt payments due in late October and early November.
Another report from MarketBeat stated that Core Scientific’s stock prices increased up to 200% which was an indication that investors were still having a strong belief in the firm’s finances. The fate of investors, however, is unknown now that the company has declared bankruptcy.
In addition to Bitcoin mining, Core Scientific provides infrastructure and solutions for other blockchain technologies such as Ethereum and Litecoin. Bitcoin mining entails using specialized computers to verify Bitcoin network transactions and add them to the public ledger known as the blockchain. For this activity, the coin is earned as a reward.
The company’s services are intended to assist businesses and organizations in incorporating blockchain technology into their operations and reaping the benefits it provides, such as security, transparency, and efficiency.
B.Riley Offers to Help Core Scientific
B.Riley Financial Inc had previously said it was going to give Core Scientific a $72 million loan to cushion the effects of its dwindling finances. The loan was also to be used to pay back creditors’ debt, so the firm will not file for bankruptcy.
B. Riley wrote in an open letter to the Mining firm that it strongly encourages Core Scientific’s Board of Directors to work quickly with creditors to reach a productive resolution for the benefit of all Core Scientific stakeholders.
B. Riley claims that Core Scientific’s financial problems are self-inflicted, but that they can be resolved with continued communication and cooperation from the company’s creditors and equity holders. As a result, B. Riley believes that Core Scientific’s bankruptcy filing is unnecessary.
