Bitcoin miner Core Scientific files for Chapter 11 bankruptcy

The mining company Core Scientific is set to file for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code, according to CNBC, citing sources.

According to a CNBC source, the firm continues to generate positive cash flow. However, that cash flow is not enough to service the debt on leased equipment.

According to CNBC, after filing the petition, Core Scientific does not intend to commence liquidation proceedings. The company expects to continue operations until reaching an agreement with major creditors.

In October, Core Scientific warned of potential exhaustion of cash reserves and their equivalents by year-end. The company cited a drop in Bitcoin price, higher electricity tariffs, and growth in hash rate. Pressure on liquidity was also driven by legal costs and the bankruptcy of one of its largest hosting clients — Celsius Network.

For the third quarter, Core Scientific reported a net loss of $434.8 million. In the November report, the firm again voiced doubt about its ability to continue operations without additional liquidity.

The company then said total debt stood at around $1.05 billion. Among the major creditors: BlockFi (in bankruptcy proceedings), the financial firm B. Riley, the NYDIG platform and the Anchorage division.

In December, co-founder and co-CEO of B. Riley, Bryant Riley, proposed that Core Scientific allocate $72 million on ‘favorable terms’ to rescue it from bankruptcy. His plan envisages a scheme of creditor payment deferrals that would require their agreement.

Since the start of the year, Core Scientific’s stock has fallen 97.7%. Market capitalisation stands at $72 million versus $3 billion at the January IPO. In light of Riley’s proposal, the company’s stock rose 53% over the past week.

In the second quarter, Core Scientific posted a net loss of $861.7 million on revenue of $164 million.

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