Core Scientific filed for Chapter 11 bankruptcy protection at the Southern District of Texas court, Bloomberg Law reported Wednesday. The reports sent bitcoin miner’s shares tumbling over 28% in premarket trading on the Nasdaq stock exchange.
Core Scientific Files for Chapter 11 Protection
Beleaguered bitcoin miner Core Scientific filed for Chapter 11 protection Wednesday at the Southern District of Texas bankruptcy court, according to the reports. Shares of the Nasdaq-listed mining firm are down nearly 28% in premarket trading following the reports.
According to the filing, Core Scientific’s estimated liabilities are in the range of $1 billion to $10 billion, and the firm has 1,000 to 5,000 creditors. The largest unsecured claim comes from financial services firm B. Riley.
The move comes just two months after Core Scientific hinted at a potential bankruptcy when it said it wouldn’t make some of its loan payments, sending its shares plummeting around 80%. Last month, the bitcoin miner said it could run out of cash by the end of 2022 and has been involved in restructuring talks since then, which seem to have collapsed.
Creditor B. Riley submitted a $72 million financing plan last week, including $40 million of funding available immediately and with “zero contingencies.” The remaining financing would become available once bitcoin recovers to $18,500.
Core Scientific’s Collapse Set to Deliver a Blow to the Crypto Mining Industry
Core Scientific’s bankruptcy filing comes as the harsh crypto winter continues to leave its mark on the industry. But the market downturn has been particularly bad in the crypto mining sector amid battered cryptocurrency prices, higher energy costs, and the use of debt to fund mining equipment. This trend is expected to continue in 2023.
The troubled mining firm accounts for around 10% of the computing power on the bitcoin network and is one of the biggest bitcoin miners in the world. The company’s bankruptcy is set to deal another major blow to the crypto-mining industry.
Other collapses earlier this year have weighed on Core Scientific, including the bankruptcy of Celsius Network’s crypto mining arm, one of the miner’s most important clients. The firm has also been affected by BlockFi’s bankruptcy, to which it owes $54 million.
This article originally appeared on The Tokenist
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