One of Core Scientific’s biggest lenders — B Riley — has offered to provide a $72 million loan to the embattled bitcoin miner in an effort to avoid unnecessary and value-destroying bankruptcy proceedings.
Published accordingly Report, B Riley plans to offer non-cash payday financing on favorable terms with a runway of more than two years to profitability. Core Scientific already has a total of $42 million in debt with B Riley.
With the latest plan, Core Scientific’s intention to cut what it owes to its equipment lenders is b. Not for Riley. In fact, the investment bank is ready to fund the first $40 million in financing immediately. All major payments to equipment lenders must be suspended until the price of Bitcoin returns to the proposed funding level of $18,500.
Following the price recovery, the proposal will provide free cash flow, which will be distributed to equipment lenders in tiered amounts until interest and partial principal payments are made in full.
“Bankruptcy is not a solution, and it would be a shame for the company’s investors. It would destroy value for the company’s shareholders, reduce potential recovery for the company’s creditors, reduce its limited resources and create massive uncertainty for all its shareholders.”
Problems for mainstream science
Core Scientific is a Bitcoin peer market and faces high energy costs. Its financial problems reflected the depressed state of the mining industry. The company stopped all principal and interest payments earlier this year, and its common stock is down 86% and currently trades at $0.15 per share, representing a market capitalization of about $50 million. With bankruptcy on the table, it revealed it was exploring strategic alternatives with respect to its capital structure and recommended all options.
The publicly traded bitcoin miner lost $435 million in Q3 and $862 million in Q2, according to the quarterly report, bringing its year-to-date net loss to $1.7 billion. Filed November 22 with the United States Securities and Exchange Commission (SEC).
Last month, another bitcoin miner Argo Blockchain failed to raise $27 million from a strategic investor, sending its shares plummeting. Many mining companies are reeling amid a harsh crypto winter.
Mining data center operator Compute North has filed for bankruptcy owing at least $500 million to at least 200 creditors. Another established player in the space, Marathon Digital, is said to be considering to get Company.
In addition, Canadian Bitcoin miner Bitfarms sold $62 million of its BTC to reduce its debts and maintain liquidity.
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