Bitcoin Mining Firm Core Scientific To File For Chapter 11 Bankruptcy

Lavina Daryanani
Source: Binance

Companies from different sub-sectors in the crypto space have collapsed this year. Right from blockchain-developing companies to crypto lenders and top exchanges, a host of prominent names couldn’t pass 2022’s slippery slope test.

Now, according to reports, the Top Bitcoin mining company Core Scientific is following a downhill journey. The top US-based publicly traded company is reportedly filing for Chapter 11 bankruptcy protection in Texas. A person familiar with the company’s finances confirmed the same with the media outlet CNBC.

Core Scientific Will Continue Mining & Not Liquidate

B.Riley Financial, one of the largest creditors of Core Scientific, wrote an open letter to the shareholders and lenders of the firm last week. At that time, the financial services platform noted that bankruptcy was unnecessary and put forth a $72 million financial plan. Through this, B. Riley hoped to prevent Core Scientific from filing for Chapter 11 bankruptcy.

Furthermore, owing to the stagnated price of Bitcoin, the company’s health worsened further. In the month of September, the US-based mining company reduced its holdings by 1576 BTC amid the rising sell pressure.

Read More – Bitcoin: Top mining company sells 1576 BTC as sell-pressure rises

Nevertheless, the CNBC report chalked out that the company is still generating positive cash flow. That cash, however, is not sufficient to repay the financing debt owed on equipment it is leasing. CNBC further noted,

The company will not liquidate, but will continue to operate normally while reaching a deal with senior security noteholders, which hold the bulk of the company’s debt, according to this person, who declined to be named discussing confidential company matters.

The stock of the company has lost most of its value this year. From trading above $10 at the beginning of the year to dropping down to $0.21, CORZ has noted a 98.02% haircut.