Core Scientific Was Approved For $37.5 Million Bankruptcy Loan From Existing Creditors

Key Points:

• Core Scientific was approved for a $37.5 million loan in January 2023.
• The new loan providers still believe in the long-term growth of the company.

On December 23, the Court announced that US bitcoin miner Core Scientific was approved on Thursday for a $37.5 million loan from a group of existing creditors to fund the company’s Chapter 11 bankruptcy, according to Reuters.

U.S. Bankruptcy Judge David Jones approved Core Scientific’s temporary bankruptcy loan during a court hearing in Houston, Texas. The company will seek final approval for the loan and be allowed to borrow another $37.5 million in January, although the company’s attorneys say they’re open to better financing options from other lenders.

Kris Hansen, who provided the new loan on behalf of creditors, said in court that despite Core Scientific’s recent challenges and the falling bitcoin price, existing stakeholders still have confidence in the company’s long-term viability.

Ahead of the news on December 21, Core Science filed for Chapter 11 bankruptcy protection. The reason it was filed was due to the sharp drop in the price of bitcoin, the high cost of bitcoin mining energy, in addition to the $7 million in outstanding debt from its Celsius Network and plans to convert most of the debt into equity.

The largest cryptocurrency mining company in the United States has announced that Core Scientific can sell some facilities under construction with a capacity of up to 1 Gigawatt after filing for Chapter 11 bankruptcy on December 21.

Core Scientific is currently the largest in the industry with around 800 to 850 megawatts of mining capacity. The mine it can sell is expected to come online in 2023, with a mining capacity of up to 1 billion watts.

The company warned in October that it could run out of money at the end of the year and bankruptcy was an option, but things seemed to have changed last week, with B. Riley offering the miners the package $72 million in financing to extend Core Science’s life by two years and save the company from bankruptcy.

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