Core Scientific claims that Celsius’ demise may be brought on by low BTC, high electricity costs, and its failure to pay its debts.
Core scientific reveals financial distress in SEC filing, says its end may be near. Core Scientific, filed paperwork with SEC on October 26 stating that it would forgo payments that were due in late October and early November.
The company attributed the issue to low Bitcoin prices, rising electricity rates, a rise in the world’s hash rate for Bitcoin, and legal disputes with the defunct cryptocurrency lender Celsius. The payments the corporation will forgo were for two promissory notes, equipment, and other finance.
It indicated that its creditors might choose to use remedies like lawsuits or debt acceleration. The consequences of those activities could include additional creditor remedies against the business as well as events of default under the Company’s other Indebtedness Agreements. It adds:
“The Company anticipates that existing cash resources will be depleted by the end of 2022 or sooner. […] Given the uncertainty regarding the Company’s financial condition, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time.”
In addition to talking with creditors and possibly reorganizing its capital, Core Scientific has retained legal and financial advisors. The lawsuit also warned that it might start bankruptcy proceedings. On September 30, the company had 1,051 Bitcoins (BTC$20,614) and $29.5 million in cash. On October 26, it had 24 BTC and $26.6 million. As of May 31st, Core Scientific held 8,058 BTC.
The business has an equity line of credit with B. Riley that allows it to sell the financial services firm up to $100,000,000 worth of common stock. As of October 26th, it had collected $20.7 million in net proceeds from the arrangement. Since filing for Chapter 11 bankruptcy on July 13, according to documents submitted to the court on October 19 by Core Scientific, Celsius has refused to pay the firm’s expenses.
According to reports, Celsius retaliated by asserting that the crypto mining company had failed to uphold its rig deployment and power supply commitments. At the time, Core Scientific asserted that Celsius was indebted to it for $2.1 million and that it was losing $53,000 every day “to meet the post-petition higher electricity tariffs that Celsius refuses to pay.”
Neal Goldman was added as the seventh director by Core Scientific, who also used the occasion to notify the SEC of the appointment. Goldman will receive a monthly salary of $35,000 for his services.
