A US bankruptcy court has granted bitcoin (BTC) miner Core Scientific provisional approval to access a $37.5 million loan from existing creditors. to finance it in the midst of its liquidity problems.
Core Scientific is one of the largest cryptocurrency mining companies in the United States, but it filed for Chapter 11 bankruptcy on December 21. as a consequence of the increase in energy costs, the decrease in income and the decrease in the price of BTC in 2022.
In a public statement made that same day, Core Scientific stated that it intends to “move quickly through the restructuring process” and maintain its mining and hosting operations..
The loan comes from a group of creditors owning more than 50% of Core Scientific’s convertible notes, who have agreed to provide debtor-in-possession facility (DIP) pledge loans up to a total of $75 million.according to court documents.
The company’s application was approved on December 22, and court documents show that the DIP loan will carry an interest rate of 10% per year..
Core Scientific will immediately be able to access $37.5 million to keep its lights on, and intends to apply for access to the remaining $37.5 million in JanuaryReuters reported on December 23, citing a lawyer for the company.
However, in the initial budget of the DIP, it was anticipated that Core Scientific would request USD 12.5 million before January 21.
The Reuters report also suggests that Creditors understand bear market challenges and look for long-term play for Core Scientific.
Kris Hansen, representative of the creditors, told the media that current shareholders “have faith” in the future of the company despite its recent problems.
In its third-quarter financial report, Core Scientific disclosed assets of $1.4 billion and liabilities of $1.33 billion as of September 30.showing a tight balance sheet in the midst of the bull market.
In particular, the company registered a loss of USD 434.8 million in the third quarter, which consolidates a total loss of USD 1,710 million so far this year. Thus, the company indicated in late November that it was very likely headed for bankruptcy without a fresh infusion of cash.
According to reports, the company has mined nearly 12,000 BTC this year, a significant improvement from the 5,769 BTC mined in 2021, though of course this hasn’t been able to save Core Scientific from its financial woes.
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