After declaring bankruptcy, Core Scientific, a major cryptocurrency mining company, made its comeback.
More often than not, bankruptcy is regarded as the death knell for any company. When a company files for insolvency, it means they can’t wind up their business as soon as possible. However, the markets are always uncertain, which could sometimes work as a lifeline too. That happened to Core Scientific, which filed for bankruptcy in December 2022.
What caused Core Scientific’s bankruptcy?
For the uninitiated, Core Scientific is one of the significant cryptocurrency mining companies traded publicly. However, its operations faltered due to rising energy costs, slumping prices of Bitcoin, and an unpaid debt from the Celsius Network. At the time of the bankruptcy filing, the company stated it had suffered losses of $434.8 million.
It also ran short on its liquidity, which was just $4 million then. But then, the firm worked on a restructuring plan that now seems to yield positive results. On May 22, Core Scientific filed for bankruptcy exit. This move was driven by an additional $46 million owing to favourable market conditions.
How did Core Scientific’s luck change?
As per Chapter 11 of the bankruptcy law, companies can continue to operate if they can get by with a reasonably-sound financial disposition. A restructuring plan comes in handy in that context. It focuses on the liquidation of assets to repay creditors and the downsizing of operations to reduce debt.
In the case of Core Scientific, the firm pointed to some significant factors that worked in its favour. First is the uptick in Bitcoin’s price, which is 60% more than at the time of bankruptcy. The next is the power price, which has been slashed by 24%. And the last is an expected settlement of $11 million due to them by Celsius Network, a lender and one of their biggest customers.
So with all that, we can say that Core Scientific’s fortunes took a turn for the better. They are riding the tailwind and may again emerge as market leaders as they were.