Bitcoin Mining Giant Core Scientific Files for Bankruptcy

Core Scientific, one of the largest bitcoin (BTC) miners by computing power, filed for bankruptcy on Wednesday and reached a deal with some of its lenders to restructure its debt.

The company filed for Chapter 11 at Southern District of Texas bankruptcy court as the crypto winter continues to take its toll on the industry. The miner's estimated liabilities are between $1 billion- $10 billion, according to the filing. It has around 1,000-5,000 creditors, with the largest unsecured claim coming from investment bank B. Riley.

The miner's estimated assets are between $1 billion - $10 billion, according to the filing. At the end of Q3, Core Scientific's assets stood at $1.4 billion, whereas its liabilities were about $1.3 billion, according to its earnings report.

The bankruptcy of Core Scientific, which accounts for about 10% of computing power on the bitcoin network, operating 143,000 mining rigs and hosting another 100,000 is the biggest one yet and is set to send shockwaves in an already crumbling industry.

Core Scientific reached an agreement with some of its creditors, in what appears to be a prepackaged bankruptcy. In a prepackaged bankruptcy, the debtor reaches some sort of agreement with its debtee before officially filling for bankruptcy.

The miner expects support from some of its convertible noteholders in the form of two debtor-in-possession (DIP) facilities, totalling up to $75 million, Core Scientific said in a press release. This support will help it go through the bankruptcy process, which it intends to do "swiftly," the press release said. The miner had $544 million in convertible notes outstanding at the end of the third quarter.

Existing convertible note holders will "equitize their debt into a significant majority of the common stock of the reorganized company," the mining firm said. Other holders of general unsecured claims and existing common shareholders will also "receive meaningful recoveries in the form of reorganized common stock and warrants" under the restructuring deal.

The company first warned of the risk of bankruptcy in late October, and said it wouldn't be paying some of its loan instalments, sending its shares plummeting about 80% on Nasdaq. In November, it reiterated that it may run out of money by the end of this year.

(Source: CoinDesk)