Bitcoin miner Core Scientific receives $72 million loan to avoid bankruptcy

Bitcoin’s weak price performance is putting a lot of pressure on the mining industry. Core Scientific is the largest miner at the moment and according to rumors the company is on the verge of collapse. To prevent that from happening, the platform’s largest creditor has issued another $72 million loan to Core Scientific.

What are the conditions?

The company will receive the first $40 million of the loan without conditions. B. Riley immediately transfers this to Core Scientific, so that they can temporarily keep their heads above water. It will receive the next $32 million on the condition that it ceases all payments to parties that lend hardware to them as long as the Bitcoin price remains below $18,500.

The last time Bitcoin was above $18,500 was on November 9. After that, Bitcoin plunged 14 percent. Finally, the provisional bottom was reached at the price of $ 15,600. Currently, Bitcoin has revived somewhat and the price is at $ 17,700. That is not the price we had hoped for at the beginning of the year, but it is again a reasonable increase compared to the provisional bottom.

Too much risk

It’s not hard to guess what ultimately got Core Scientific into trouble. “Core Scientific pursued an aggressive and ill-considered strategy […] it continued to build power facilities and expand miners while never selling Bitcoin at higher rates,” said B. Riley’s analysis.

Now the company was forced to sell 9,618 Bitcoin in April at a value of $362 million. That represented a significant loss for the miner. In its latest financial report dated Nov. 22, the company admitted it didn’t have enough cash to survive 2022.

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It also said it had doubts about the possibility of withdrawing money from the market. That has now been partly successful. Since the start of 2022, Core Scientific’s share price has fallen 97.7 percent from $11.02 to $0.25. Getting in at this point is a huge risk.

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