• Core Scientific has officially filed for bankruptcy following a decline in the firm’s operating performance and liquidity.
• The company plans to enter into a restructuring support agreement with the Ad Hoc Noteholder Group, representing more than 50% of the holders of its convertible notes.
• Core Scientific has committed to continuing its self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis.
Core Scientific, a giant Bitcoin miner, has recently filed for bankruptcy in the U.S. This filing follows a decline in the firm’s operating performance and liquidity, as well as the failure by certain of its hosting customers to honor their payment obligations. The company had been facing a prolonged decrease in the price of Bitcoin, an increase in electricity costs necessary to power the data centers, and other pressures.
In order to address these issues, Core Scientific has actively taken steps to decrease monthly costs, delay construction expenses, reduce and delay capital expenditures, and increase hosting profitability. Despite the filing, the company has committed to continuing its self-mining and hosting operations, which remain significantly cash flow positive on a debt-free basis. To this end, Core Scientific plans to enter into a restructuring support agreement with the Ad Hoc Noteholder Group, representing more than 50% of the holders of its convertible notes.
The goal of the restructuring support agreement is to provide Core Scientific with additional liquidity to ensure it can continue to operate its existing self-mining and hosting operations. The agreement is also intended to help the company navigate the restructuring process as swiftly as possible.
The filing of these cases is an unfortunate yet necessary step for Core Scientific. The company has expressed its commitment to continuing its operations and is hopeful that it can emerge from the restructuring process in a stronger position.