- Bitcoin mining hardware provider Core Scientific hopes to emerge from bankruptcy this month
- The company faced bankruptcy in December 2022 amid the bear market that affected multiple Bitcoin miners.
- Pending approval from the bankruptcy court, Core Scientific aims to return to the Nasdaq and resume regular operations.
Bitcoin mining hardware provider Core Scientific is on the verge of an exit from bankruptcy following a restructuring and a boost in the Bitcoin price in 2023. Core Scientific fell into bankruptcy in December 2022, just one of a number of Bitcoin miners who suffered hugely during the bear market, but the company is poised to make a return to the Nasdaq and regular operations if the bankruptcy court approves its plan.
A Year in Bankruptcy
Core Scientific began encountering financial difficulties in November 2022 due to high operational costs and a then-stagnant Bitcoin price, resulting in substantial losses. The company’s stock had already plummeted by 98% in the prior year, echoing the challenges faced by other mining firms in the bear market. That month the company reported annual losses exceeding $1.7 billion, with Q3 alone reflecting a $434 million loss.
Unhappy creditors took legal action, alleging payment failures, and despite an offer of a $72 million financing plan to prevent bankruptcy, Core Scientific ultimately chose to file for bankruptcy. The company confirmed it would continue to mine bitcoin in the interim, and the resurgence in price in 2023 couldn’t have come at a better time.
As a result of the exit from bankruptcy, which the United States Bankruptcy Court for the Southern District of Texas must approve, Core Scientific will relist on the Nasdaq by the end of January 2024.
Shareholders will receive shares of Core Scientific’s new common stock and warrants, making up approximately 60% of the company’s new equity. If all warrants are exercised in cash, the proceeds would completely repay existing debt, reducing it by about $1 billion from its debt balance before the plan.
Core Scientific Plans Epic Comeback
In a press release announcing its good news, Core Scientific Chief Executive Officer Adam Sullivan called the development “a defining moment in our reorganization” adding that the company was “poised to emerge by the end of this month as an even stronger company, with a highly motivated team that is aligned for success.”
The reorganization plan involves the equitization of around $400 million in secured and unsecured claims while reducing annual debt service by approximately $60 million. Additionally, $95 million in new exit capital, derived from an oversubscribed $55 million equity rights offering and $40 million in new financing through the $80 million Exit Facility provided by certain Convertible Noteholders, is a crucial element to the bankruptcy exit.