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Saturday, February 4, 2023

Core Scientific Gets Approval For $37.4M Bankruptcy Loan

According to a report by CNBC, Core Scientific (CORZ), one of the biggest bitcoin miners on the market, intends to apply for bankruptcy protection on Wednesday morning in Texas but would go on mining bitcoin during the procedure.

Core Scientific is the first publicly traded firm to file for bankruptcy, even though numerous mining companies have struggled financially during the down market. A debt restructuring agreement was reached on Tuesday between bitcoin miner Greenridge and NYDIG, allowing the company to temporarily escape bankruptcy.

Core Scientific Filed For Bankruptcy

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In September, Compute North, which runs the data centers where many miners’ activities are housed, filed for bankruptcy.

The collapse of Three Arrows Capital in July caused the price of cryptocurrencies to plunge, according to Generate Capital, a financier of Compute North. As a result, the company alleged many “technical events of default” in July. The $50 million that Core Scientific’s competitor Marathon Digital deposited with Compute North for services is only expected to be recovered in part, according to Marathon Digital.

To help struggling miners, Binance Pool announced a $500 million fund in October, with loans secured by both the companies’ actual assets and the cryptocurrency they were mining. Additionally, Bitmain has started a $250 million fund with a comparable goal. One of the biggest cryptocurrency mining firms in the country, Core Scientific, filed for Chapter 11 bankruptcy on December 21 due to growing energy costs, decreased income, and the expected decline in the price of bitcoin in 2022.

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That same day, Core Scientific revealed its plans to “move expeditiously through the reorganization process” while maintaining its mining and hosting activities in a public announcement.

According to Reuters, which cited a corporate attorney, Core Scientific will be allowed to access $37.5 million right now to keep the lights on and plans to ask for access to the remaining $37.5 million in January.

However, it was anticipated in the first DIP budget that Core Scientific would submit a $12.5 million application by January 21.

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