Core Scientific

History

2022: Filing for bankruptcy

On December 21, 2022, the mining operator Core Scientific, one of the largest in the United States, filed for bankruptcy. The company is initiating Chapter 11 U.S. Bankruptcy Code protection from creditors while continuing to operate as normal.

The bankruptcy filing follows a year of falling cryptocurrency prices and rising energy prices. Core Scientific mines cryptocurrencies, including Bitcoin. This process involves powering data centers across the country equipped with highly specialized computers that recalculate mathematical equations to confirm transactions and simultaneously create new tokens. This process requires expensive equipment, certain technical knowledge and a large amount of electricity.

One of the largest US mining operators filed for bankruptcy

Core Scientific still generates positive cash flow, but this money is not enough to pay off the debt on financing equipment that it leased according to CNBC, which is familiar with the company's situation. Core Scientific will not liquidate, but will continue to operate as usual until it reaches an agreement with the holders of the senior securities that bear the bulk of the company's debt.

Chapter 11 of the U.S. Bankruptcy Code was enacted in 2018. The goal is to allow the company to carry out restructuring in different ways. In particular, Core Scientific may cancel some contracts or sell assets. In accordance with the law, the company retains control over the business. But it is possible to hire a trustee who will replace the company's directors.

In early December 2022, one of its largest creditors, B Riley Financial, provided Core Scientific with $72 million in funding to prevent the company from going bankrupt, after the latter reported quarterly losses and warned of possible bankruptcy.^[1]

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