By George Ward
Some days ago, a creditor planned to help the crypto mining firm, Core Scientific, avoid potential bankruptcy. However, the deal did not go as planned.
According to recent reports, Core Scientific has allegedly applied for a Chapter 11 bankruptcy in Texas. Additionally, reports reveal that the company’s finances suffered due to low BTC prices and falling revenue.
Core Scientific Files For Chapter 11 Bankruptcy
On December 14th, B. Riley, a financial services company, promised to give Core Scientific a non-cash finance of $72 million. In addition, $40 million would have no contingencies, while $32 million had some conditions attached to it, which would help safeguard stakeholders’ interests.
Core Scientific’s stock price shot up by about 200% after the news. However, the price has witnessed a steady drop since then. Meanwhile, the decision came after the crypto miner’s market value dropped to $78 million.
For perspective, as of July 2021, the company’s valuation was $4.3 billion. However, in April, the bearish crypto market forced Core Scientific to sell about 9,618 BTCs to cover operational costs.
According to a previous CNBC report, inside sources claimed that Core Scientific would apply for bankruptcy on December 21st. Although Core Scientific generates huge cashflows, its income cannot adequately cover its operational costs.
One of these costs is repaying the loan for its BTC mining equipment. Furthermore, the reports alleged that Core Scientific does not plan to liquidate its earnings and will keep mining cryptos.
On October 26th, the crypto miner’s filing with the US SEC revealed it was in financial distress. According to Core Scientific, the low price of BTC, high cost of electricity, and high BTC hash rate affected its finances.
Microsoft Prohibits Crypto Mining
There is also the bankruptcy situation with Celsius, a crypto lender. Celsius owed Core Scientific debts which were wiped out after the company went bankrupt.
Meanwhile, Microsoft, the popular tech company, recently stopped its cloud users from participating in crypto mining. The aim was to stabilize Microsoft’s cloud services.
According to reports, Microsoft on December 1st upgraded its use policy. The update stated that crypto mining is banned except with Microsoft’s approval.
Microsoft states that this step would help decrease the incidence of impaired or disrupted services using Microsoft Cloud.