Core Scientific’s Creditor Offers $72m To Avoid Bankruptcy

Bitcoin Miner Core Scientific:

B. Riley offered a plan for the troubled miner to avoid bankruptcy and stated that its problems were “self-imposed.”

Bitcoin miner Core Scientific has been offered $72 million in finance from financial services company B. Riley to stay afloat and protect value for Core Scientific shareholders.

In a letter dated December 14 outlining the conditions of the financing deal, B. Riley, a major lender to Core Scientific with $42 million in loans still outstanding, stated that it is prepared to fund the first $40 million “immediately, with zero contingencies.”

The financial platform claimed the remaining $32 million would be subject to the Bitcoin miner stopping all payments to equipment lenders while the price of Bitcoin is below $18,500.

Bitcoin’s price recently exceeded $18,500 on November 9 before dropping more than 14% in a single day.

The situation Core Scientific is in was harshly described by B. Riley, who claimed the company had adopted “an aggressive, ill-conceived plan […] to continue to build up power facilities and grow miners while never selling Bitcoin on hand and never hedging prices.”

Celsius’s Failure:

It stated that as a result of this strategy, Core Scientific was compelled to sell 9,618 BTC in April for a price of $362 million, resulting in a huge loss for the miner.

In a quarterly report submitted on November 22, Core Scientific acknowledged lacking the funds necessary to operate through 2023. Additionally, it stated that it was unsure of its capacity to raise money through stock markets or finance.

The company cited the low price of Bitcoin, rising electricity prices, and Celsius’s failure to repay a $2.1 million loan as the causes of its financial difficulties in a filing on October 26.

B. Riley reminded the miner of its duty to shareholders and was optimistic Core Scientific would accept the loan offer, noting:

“In our opinion, to sanction a Chapter 11 file would be a severe breach of the fiduciary duties due by the Board and Management—who must put our interests ahead of their own”

Conclusion:

The share price of Core Scientific has decreased by 97.7% from $11.02 to $0.25 since the start of 2022.