Bitcoin miner Core Scientific has received $72 million in finance from financial services company B. Riley in order to stay afloat, the creditor also outlined a path for it to avoid bankruptcy.
In a letter dated December 14 outlining the conditions of the financing deal, B. Riley, a major lender to Core Scientific with $42 million in loans still outstanding, said that it is willing to finance the first $40 million “immediately, with zero contingencies.”
The financial platform said the remaining $32 million would be subject to the Bitcoin miner stopping all payments to lenders of equipment while the price of Bitcoin is below $18,500.
Bitcoin’s price recently exceeded $18,500 on November 9 before dropping more than 14% in a single day.
The situation Core Scientific is in was harshly described by B. Riley, who said the company had adopted “an aggressive, ill-conceived plan […] to continue to build up power facilities and grow miners while never selling Bitcoin on hand and never hedging prices.”
It said that as a result of this strategy, Core Scientific was compelled to sell 9,618 BTC in April for a price of $362 million, resulting in a huge loss for the miner.
In a quarterly report submitted on November 22, Core Scientific acknowledged that the business lacked the funds necessary to operate into 2023. Additionally, it said that it was unsure of its capacity to obtain money via stock markets or finance.
The company cited the low price of Bitcoin, increasing power prices, and Celsius’s failure to return a $2.1 million loan as the causes of its financial difficulties in a filing on October 26.
B. Riley reminded the miner of its duty to shareholders and was optimistic Core Scientific would accept the loan offer, noting:
“In our view it would be a gross violation of the fiduciary duties owed by the Board and Management for those fiduciaries—who must put our interests ahead of their own—to authorize a Chapter 11 filing.”
The share price of Core Scientific has decreased by 97.7% from $11.02 to $0.25 since the start of 2022.
