The loan would allow Core Scientific to keep its mining and hosting operations running during the restructuring.
A US bankruptcy court has awarded Bitcoin
Miner Core Scientific granted preliminary approval to access a $37.5 million loan from existing creditors to fund it amid liquidity issues.
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 revenue and BTC’s 2022 price drop.
In a public statement the same day, Core Scientific said it intends to “quickly go through the restructuring process” and maintain its mining and hosting operations.
The loan comes from a group of creditors who own more than 50% of Core Scientific’s convertible debentures, who have agreed to loans totaling $75 million, according to court filings.
The company’s application was approved on Dec. 22, and court documents show the DIP loan carries an interest rate of 10% per annum.
Core Scientific will have immediate access to $37.5 million to keep the lights going while it intends to access the remaining $37.5 million in January, Reuters reported Dec. 23, citing a lawyer the company.
However, the original DIP budget projected that Core Scientific would request $12.5 million by Jan. 21.
Stay safe in Web3. Learn more about Web3 Antivirus →
Main budget of the scientific DIP: Stretto
The Reuters report also suggests that creditors understand the challenges of the bear market and are considering a long-term collaboration with Core Scientific.
Kris Hansen, a creditor representative, told the outlet that despite the recent troubles, existing stakeholders have “confidence” in the future of the company.
In its third-quarter financial report, Core Scientific said it had assets of $1.4 billion and liabilities of $1.33 billion as of Sept. 30, showing a stretched balance sheet amid the bull market .
Also Read: Bitcoin Plunges Below $16.7K as US GDP Hits BTC’s New ‘Death Cross’ Price
Notably, the company reports a loss of $434.8 million in the third quarter, with total losses hitting $1.71 billion so far this year. The company indicated at the end of November that without a new cash injection it would most likely be heading for bankruptcy.
The company is said to have mined nearly 12,000 BTC this year, a significant improvement from the 5,769 BTC mined in 2021, but of course that couldn’t bail Core Scientific out of its financial woes.