A restructuring plan for bankrupt Bitcoin miner Core Scientific
A restructuring plan for bankrupt Bitcoin miner Core Scientific could be finalized by September, with the company expecting an additional $46 million boost due to recent favorable market conditions.
Liquidity Improvement and Reorganization Plan
In a May 22 filing in a Texas Bankruptcy Court, Core Scientific’s lawyers revealed that the company’s liquidity position has significantly improved since filing for bankruptcy. Consequently, the firm plans to file a reorganization plan in the near future. The plan is currently being negotiated with key stakeholders, and the company aims to build as much consensus as possible regarding the future structure of the revitalized Core Scientific after emerging from bankruptcy.
Chapter 11 Bankruptcy and Restructuring Measures
Chapter 11 bankruptcy allows a company to continue operations while stakeholders work on a restructuring plan. This plan may involve downsizing business operations to reduce debt or liquidating assets to repay creditors.
Market Factors Contributing to Liquidity Boost
Core Scientific attributes its improved liquidity to several market factors:
- Decreasing power costs
- Increasing Bitcoin prices
- Higher blockchain hashrate
Positive Market Trends
When Core Scientific filed for bankruptcy on December 21, 2022, the price of Bitcoin was $16,904. Since then, Bitcoin’s price has increased by over 60% and is currently around $27,000, according to CoinMarketCap. The filing also notes that power prices have decreased by 24% since the petition date, while the network hashrate has jumped by 54%.
Estimated Additional Funds and Pending Litigation
Despite delays in the bankruptcy proceedings, Core Scientific estimates it will have an additional $46 million in funds once the restructuring plan is finalized. The company is also expecting a significant windfall from Celsius Network, as it claims the bankrupt crypto lender owes it approximately $11 million. The two firms have been engaged in a lengthy court battle since October 19, 2022, when Core Scientific first accused Celsius of failing to pay its power bills.