In its recent filing to the court, Bitcoin mining firm Core Scientific cited favourable market conditions and improved liquidity position as bringing it closer to exiting bankruptcy. The embattled BTC miner that has, since December 21, 2022, been battling bankruptcy proceedings is optimistic of quicker recovery than earlier projected.
Improved Crypto Market Conditions Yield Liquidity Boost
The Bitcoin miner is set to revise the restructuring plan in 3 months. Under the stewardship of Mike Levitt as its chief executive, Core Scientific anticipates overcoming proceedings with an extra $46 million. The sudden tide change at the miner is attributed to favourable market conditions.
The filing by Core Scientific’s attorneys on Tuesday, May 22, informs the court of a better liquidity position since filing for bankruptcy. The filing indicates that the Bitcoin mining firm is set to file a revised reorganization plan.
The lawyers submitted that the Core Scientific management is negotiating the reorganization plan with the primary stakeholders. As such, it prioritizes the opportunity to optimize consensus built on how it will emerge from the bankruptcy proceedings.
The filing lauded the Chapter 11 bankruptcy protection for allowing the miner to continue operating till its stakeholders reach an agreement regarding its restructuring plan. The filing acknowledges that the stakeholders would be weighing downsizing operations, debt reduction or liquidating assets to settle creditors’ obligations.
Core Scientific Benefits from Higher Bitcoin Prices
The Tuesday filing by the Core Scientific legal team before the Texas Bankruptcy Court attributed the liquidity boost to the decreased power costs. The decreased spending on energy bills coincides with an increased blockchain hash rate.
The submission by the lawyers cited that the recovery of the broader crypto market from the prolonged winter has seen the Bitcoin prices shoot. In particular, Bitcoin was priced at $16904 when CORZ filed for bankruptcy on December 21. Since then, Bitcoin has rallied by 60% to exchange hands in a range hovering around $27000, as illustrated by the CoinMarketCap.
Reduced Energy Bills and Improved Hash Rate Favor Quicker Return for Core Scientific
The mining firm benefits from reduced expenditure bills, particularly with power prices declining by 24%. Similar improvement is evident in the network hash rate risen by 54% since filing for the petition.
The attorneys decry the delay experienced in the bankruptcy proceedings as hampering the restructuring plans. Nonetheless, the mining firm will benefit from favourable crypto market conditions. As such, the bullish steam is set to yield $46 additional funds.
Lastly, the filing projected receiving a substantial windfall. The receipt is the claims owed by Celsius Network that the bankrupt crypto lender is set to settle, so the $11 million claim it owes Core Scientific.
The conclusion of the tussle pitting Core Scientific and Celsius is set to end the year-long proceedings that started in October last year. The suit features Celsius as the defendant accused by Levitt-led Core Scientific alleging failure to honour settling the power bills.
Core Scientific Recovery Imminent as it Signs Deal to Host Additional Mining Rigs
Meanwhile, Core Scientific recovery is imminent, with the BTC miner signing deals to host rigs for three firms where Celsius Mining recently unplugged its 37000 fleet. The contract will see the addition of 18000 bitcoin mining rigs in a deal concluded in late April.
The contract signals prospects of the leading publicly listed mining firm by computing power overcoming the bankruptcy proceedings. The sudden improvement in the market conditions convinced a group of equity holders that their financial position would improve significantly.
The contract details that Core Scientific would add 6914 rigs for Greenidge Generation Holdings, 1021 from LM Funding and 10000 from Ault Alliance. Core Scientific targets to host the rigs in Dalton, Calvert City, and Denton in directly replacing Celsius Mining rigs.
Their full installation by the end of May will increase the machines hosted to 70000, besides the 155,000 utilized for self-mining.
The new contracts are set to benefit Core Scientific given their favourable pricing range comprising variable and proceeds-sharing deals.
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