Core Scientific stock sinks after bitcoin miner files for bankruptcy
Core Scientific (NASDAQ:CORZ) stock plunged 27% in Wednesday premarket trading after the bitcoin (BTC-USD) miner filed for Chapter 11 bankruptcy in Texas as the market downturn lingers.
The company, one of the largest publicly-traded producers of bitcoin (BTC-USD), said it expects to receive support from over half of the holders of its convertible notes through a debtor-in-possession facility of up to $75M.
Under the restructuring deal, its existing holders of convertible notes "will equitize their debt into a significant majority of the common stock of the reorganized company," the miner said. And holders of general unsecured claims and existing common shareholders would also get "meaningful recoveries in the form of reorganized common stock and warrants."
"These funds, along with ongoing cash generated from operations, are anticipated to provide the necessary financing to effectuate the planned restructuring, facilitate the emergence from Chapter 11, and cover the fees and expenses of legal and financial advisors," it said.
Meanwhile, the mining company said it will keep operating its existing self-mining and hosting businesses, "which remain significantly cash flow positive on a debt-free basis."
Core (CORZ) first warned about seeking bankruptcy protection towards the end of October. At the time, the company noted it expects to run our of cash by the end of 2022 or sooner due to the slump in bitcoin's (BTC-USD) price, rising electricity costs, the increase in the BTC network hashrate and litigation with insolvent crypto exchange Celsius Network.
While Core (CORZ) represents a relatively big portion of computing power on the bitcoin (BTC-USD) network, the price of the token inched up 0.3% to $16.83K as of 8:39 a.m. ET.
Last week, (Dec. 14) B. Riley (RILY) proposed a $72M restructuring plan to avoid bankruptcy.