Core Scientific lenders see promise in it, despite financial difficulties

Core Scientific’s bankruptcy proceedings attracted the attention of Reuters, Bloomberg and The Wall Street Journal.
The bankruptcy proceedings of a major bitcoin miner, Austin-based Core Scientific, have come to the attention of a number of media outlets, including Reuters, Bloomberg and The Wall Street Journal. On Dec. 21, Core Scientific contacted to a court in the Southern District of Texas, asking that it be protected from immediate payment of its obligations, which is possible under Chapter 11 of the U.S. bankruptcy law.
As the attention CNBC, the company’s businesses continue and will continue to mine bitcoins despite Core Scientific’s own bankruptcy proceedings initiated.
The fact is that the company announced that it has already reached an understanding in principle with its creditors to restructure its obligations. The holders of convertible notes are ready to provide Core Scientific $ 75 million in financing for a share of 97% in the equity of the organization. Such an initiative was taken by Ad Hoc Noteholder Group, which represents the interests of investors who collectively own more than 50% of Core Scientific’s convertible notes.
Thus, those creditors of the organization, who own debt securities of the bitcoin miner, believe that Core Scientific has a perspective and estimate the value of the organization’s equity capital much higher than zero. In the case of imminent bankruptcy, such an assessment becomes zero, which in this case is not observed. In favor of Core Scientific witness Positive financial results of the company by the end of November.
This is an important signal to all other creditors of Core Scientific, the largest of which is BRF Finance, the financial division of B. Riley Financial. Core Scientific’s obligations to BRF Finance total $42.4 million. BRF Finance, which also owns Core Scientific’s notes, is ready to provide the bitcoin miner $72 million in financing, expecting the funds to be sufficient for two years, during which time Core Scientific is expected to improve its profitability.
BRF Finance’s de facto proposal means that the lender sees the possibility of a strong bitcoin price rally on the eve of or immediately after the next pay per block reduction, that is, the halving in the bitcoin blockchain, which is expected in the first half of 2024.
In addition, BRF Finance has made it clear that it sees the prospect of an increase in the equity value of Core Scientific and said it is willing to help the bitcoin miner to get its capitalization on Nasdaq higher, which in practice means the possibility of an additional issue of common stock.
As a reminder, Sorge Scientific has about 150,000 complete mining rigs, and the company claims that the processing power of all miners under the organization’s management is about 10% of the global bitcoin hash rate.

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