Core Scientific Inc. has announced that it has filed for bankruptcy. It is among the largest cryptocurrency mining companies that are publicly traded. The company is based in the United States.
Bankruptcy was announced on December 21
The company officials announced on Wednesday that they have proceeded with filing bankruptcy. They confirmed that they have filed for protection under Chapter 11 bankruptcy.
Core Scientific has become another company that has been impacted by the contagion that is causing a great void in the cryptocurrency industry.
The cryptocurrency industry is still in the darker zone and there are so many problems the industry is currently facing. The downfall is constant and has lingered for far too long.
As a result, many projects have ended up filing for bankruptcy as they are not able to run their operations. With the operations not bringing in much profit, the companies have started to shut down.
Then there is the contagion that has started due to the crash of the FTX exchange that took place in November. It has caused a major problem for the entire cryptocurrency industry as well.
Current Situation of the Crypto Market
Out of all the trading sectors, it is the cryptocurrency industry that has been impacted the most. As the year 2022 began, the overall valuation of the cryptocurrency industry was almost $3 trillion.
However, the cryptocurrency industry started to deteriorate with the start of the running year. Things started to go south for the cryptocurrency industry and the market’s valuation started to decline.
Since the beginning of the year until now, the overall valuation of the cryptocurrency industry has lost almost $2 trillion. This is a huge setback for the entire cryptocurrency as it is still finding it hard to recover.
This year has faced the worst crashes this year where the first major crash was the Terra Network causing the TerraUSD depegging.
Then came the FTX crash, causing an even greater impact on the entire cryptocurrency industry. So far, many major projects from the cryptocurrency industry have lost their operational power and have shut down.
Among the major networks were the Celsius Network and Three Arrows Capital. Both networks faced a major crisis in terms of finances and liquidations. As a result, they had to file for bankruptcy.
What Does Core Scientific Plan on Doing Next
The Core Scientific executives have already communicated that they will not resort to the liquidation of their company and assets.
Instead, they will continue running their operations as normal. For this purpose, they have already started working on a restructuring support agreement.
The bankruptcy court will help them get back on their feet so they can start facilitating their users and creditors.
The company has revealed that it will be presenting the creditors with the restructuring agreement so they remain on the same page. At the moment, 50% of the holders of the convertible notes at the company are creditors.
Share Prices for Core Scientific Plunged 14%
From the start of the year until now, the overall share prices of Core Scientific have dipped 98%. Still, the share prices for the company dipped 14% in the latest trading session.
The company has revealed that they already have creditors coming in to support them. They have agreed to provide $56 million that will be used for the financing of debts.
B. Riley Financial Inc is the largest creditor of Core Scientific. Just last week, the same creditor had offered a huge amount to the Core Scientific officials so they do not proceed with filing bankruptcy.
As per reports, B. Rile Financial offered their company a total of $72 million so they do not proceed with bankruptcy and continue operating.
The company has announced in its bankruptcy petition that they have 1,000 to 5,000 creditors and liabilities, and assets that are worth up to $10 billion.