According to CNBC sources, activities would not be affected by bankruptcy proceedings. One of the biggest bitcoin miners in the market, Core Scientific (CORZ), intends to declare bankruptcy in Texas on Wednesday morning while continuing to mine bitcoin.
Core Scientific is the first publicly traded firm to file for bankruptcy, despite the fact 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.
In September, Compute North, which runs the data centers where many miners' activities are housed, filed for bankruptcy. One of Compute North's financiers, Generate Capital, said the company declared a number of "technical events of default" in July when cryptocurrency values fell due to the collapse of Three Arrows Capital. The $50 million that Core Scientific's competitor Marathon Digital placed with Compute North for services is only expected to be recovered in part, according to Marathon Digital.
In order to help struggling miners, Binance Pool announced a $500 million fund in October, with loans secured by both the firms' actual assets and the cryptocurrency they were mining. Additionally, Bitmain has started a $250 million fund with a same goal.
Compared to rivals Riot Blockchain (RIOT) and Marathon Digital Holdings (MARA), Core Scientific's stock is down 98% year over year.
Investment bank B Riley had earlier in December offered a $72 million financing scheme that would enable Core Scientific to escape bankruptcy. B Riley publicly stated:
"In our opinion, the vast majority of Core Scientific's issues are self-imposed and can be corrected in conjunction with an open, transparent discussion and ongoing participation with its creditors and equity holders."
Early November, according to Bloomberg, investors started collaborating with restructuring lawyers at Paul Hastings to suggest a solution other than bankruptcy. Later that month, the business revealed that it had $32 million in cash at the end of October but issued a caution that owing to increased finance costs, rising energy expenses, and a depressed pricing for bitcoin, it would run out of cash by the end of the year.
Although Core Scientific continues to have positive cash flow, the bear market has reduced its profits, making it impossible for them to meet the expenses of financing its mining equipment.
Most of the Asia trading day saw little change in the price of Bitcoin, which was up 0.27% at $16,840.
