The Austin, Texas-based miner said it would not liquidate and would continue to operate normally, as it expects to enter into a restructuring support agreement with its creditors, who represent over 50% of the holders of its convertible notes.
The filing in a Texas court comes as crypto prices have plummeted. After rapid growth in 2020 and 2021, bitcoin – the most popular digital currency by far – is down more than 60% in 2022.
This, year the wider crypto market shrank by $1.4 trillion, squashed by rising interest rates, vanishing risk appetite and corporate collapses, including Sam Bankman-Fried’s FTX.
In a statement on Wednesday, Core Scientific said its creditors have also agreed to provide up to $56 million in debtor-in-possession financing.
One of the largest creditors of Core Scientific, B. Riley Financial Inc, had offered $72 million last week to avoid the bitcoin miner’s bankruptcy.
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In its bankruptcy petition, Core Scientific said it has $1 billion to $10 billion in assets and liabilities, and creditors between 1,000 and 5,000.
Core Scientific went public through a merger with a blank-check company backed by BlackRock Inc last year, in a deal that valued the cryptocurrency miner back then at $4.3 billion.
Bitcoin miners have been under severe pressure as their profitability dropped amid a slump in cryptocurrency prices and soaring energy rates. The extreme market conditions have also led to bankruptcies of other major cryptocurrency lenders such as Celsius Network and Voyager Digital Ltd.
Core Scientific was also impacted by litigation with Celsius Networks LLC and its affiliates.
CNBC first reported about Core Scientific’s bankruptcy plan.
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