Bitcoin mining company Core Scientific, which recently received a financing offer from B.Riley has reportedly filed for Chapter 11 bankruptcy in Texas due to declining sales and BTC price.
![Core Scientific reportedly files for Chapter 11 bankruptcy](https://i0.wp.com/coinscreed.com/akoakris/2022/12/image-48.png?resize=630%2C356&ssl=1)
Financial services company B. Riley proposed financing Core Scientific with $72 million on December 14 — $42 million with no restrictions and $32 million with them — in order to preserve value for investors. After Core’s value dropped from $4.3 billion in July 2021 to $78 million at the time of reporting, the decision was taken.
In order to continue operating, Core Scientific had to sell 9,618 BTC in April as a direct consequence of a protracted bear market.
According to a CNBC story, the Bitcoin mining firm will file for Chapter 11 bankruptcy on December 21, 2022, according to a source familiar with the company’s finances.
Even while the firm continues to have positive cashflows, the earnings are insufficient to cover the expenses of running the business, including paying down the lease on its Bitcoin mining equipment.
According to the article, Core Scientific has no intentions to liquidate and will keep operating its mining activities. The company’s stock briefly increased by around 200% as creditors volunteered to lend money, but it has subsequently been steadily declining.
Financial hardship was disclosed in a Core Scientific filing with the US Securities and Exchange Commission on October 26.
The main causes of this predicament, according to the business, were low Bitcoin prices, rising power expenses, a rise in the world’s hash rate for Bitcoin, and a bankruptcy filed by cryptocurrency lender Celsius that discharged Core Scientific’s obligations.
In an effort to improve the reliability of its cloud services, tech giant Microsoft has prohibited its cloud customers from mining cryptocurrency.
Microsoft changed its acceptable usage policy on December 1 to make clear that “mine cryptocurrency is illegal without prior Microsoft clearance,” as Cointelegraph reported.
The business justified the action by noting that it wanted to safeguard clients by lowering the possibility of services in the Microsoft Cloud being interrupted or degraded.