Jun 22, 2023 12:25
Holders of the allowed debtor-in-possession claims (DIP) for
the bankrupt Bitcoin miner Core Scientific will receive full and final
satisfaction of their claims, the company said in a joint Chapter 11 plan
filed yesterday (Tuesday).
Filed before a bankruptcy court in Texas, the company said its
liquidity had increased since it sought Chapter 11 bankruptcy protection last December. It attributed the increase to improved Bitcoin prices, an
increase in Bitcoin network hash rate, and a reduction in mining cost.
Core Scientific’s
Compensation Plan
The holders of the DIP claims will get full payment in
cash or other agreed payment alternatives, the plan noted. Moreover, any liens granted to secure
the allowed DIP claims would be terminated, removing the secured interest over
the company’s assets. Chapter 11 bankruptcy protection allows a business to
continue operating while it reorganizes its debt.
In May, the federal
judge overseeing the proceeding, Judge David Jones of the Southern
District of Texas, said that Core Scientific should fast-track its plans to
emerge from the bankruptcy protection, according to a report by
CoinDesk. In response, the miner’s legal team said the company could reach a
reorganization plan by September.
Core Scientific asked
for more time to come up with a business plan in light of the changing cryptocurrency
mining business.
Bitcoin prices and hash rates were on the rise, and the electricity cost had
dropped, it said. For this reason, the miner’s activities were more profitable and could
generate more revenues to repay the $6 million debt.
Improving Operations
According to the production update released
in May, the company produced 1,314 bitcoins under self-mining operations, which is a 16%
increase from the previous month. The company’s number of operated miners
increased by 1,000, and the mining hash rate increased from 14.8 EH/s to 14.9 EH/s.
Notably, according to a
court decision issued in January, Core Scientific closed mining machines
associated with Celsius Mining, its largest customer. The closure was due to a
disagreement between the two firms. Core Scientific claimed Celsius was not
paying its dues, while Celsius objected, saying the miner had raised energy
rates.
Core
Scientific was one of the largest cryptocurrency mining before collapsing due to market instability caused by the implosion of FTX last November. It went
public in 2021 with
over $4 billion valuation, and after going bankrupt, that value dropped to
approximately $70 million.
This article was written by Jared Kirui at www.financemagnates.com.
World Crypto Global
