BTC miner Core Scientific gets tentative green light for $37.4 million bankruptcy loan

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A U.S. bankruptcy court has granted bitcoin (BTC) miner Core Scientific interim approval to access a $37.5 million loan from existing creditors to fund the company amid its liquidity problems.

Core Scientific is one of the largest cryptocurrency mining companies in the United States, but filed for Chapter 11 bankruptcy on December 21 due to rising energy costs, falling revenues and the BTC price in 2022.

In a public statement issued the same day, Core Scientific said it intended to move quickly through the restructuring process and maintain its self-mining and hosting operations.

The loan is from a group of creditors called Ad Hoc Noteholder Group which owns over 50% of the convertible notes of Core Scientifics who have agreed to provide debtor-in-possession (DIP) facility commitment loans up to a total of $75 million, according to court records.

The company’s application was approved on December 22 and court documents show that the DIP loan will carry an interest rate of 10% per annum.

Core Scientific will be able to access $37.5 million immediately to keep the lights on, while it intends to seek access to the remaining $37.5 million in January, according to a Dec. 23 report from Reuters. quoting a company attorney.

However, in the original DIP budget, it was planned to request $12.5 million by January 21.

Main budget of the scientific DIP: Stretto

The Reuters report also suggests creditors understand the challenges of the bear market and are considering a long-term play with Core Scientific.

Kris Hansen, a creditor representative, told the outlet that existing stakeholders had faith in the company’s future despite its recent troubles.

In its third-quarter financial report, Core Scientific said it had $1.4 billion in assets and $1.33 billion in liabilities as of September 30, showing a tight balance sheet amid the bull market.

Related: Bitcoin Plunges Below $16.7K as US GDP Meets BTC’s New “Death Cross” Price

Notably, the company reports a loss of $434.8 million in the third quarter which, added to the losses of the previous two quarters, with total losses reaching $1.71 billion so far this year. Thus, the company indicated at the end of November that it was most likely heading for bankruptcy without a new injection of cash.

The company is said to have mined nearly 12,000 BTC this year, marking a significant improvement from the 5,769 BTC mined in 2021, but that was of course not able to save Core Scientific from its financial difficulties.

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