Crypto Miner Core Scientific To File For Bankruptcy, But Will Not Liquidate: Report

Texas-based bitcoin mining company Core Scientific will file for Chapter 11 bankruptcy protection early Wednesday morning, a source told CNBC, while adding that the mining operations would continue.

The move comes a week after investment bank B Riley, one of the lenders of Core Scientific, proposed a $72 million financing plan to the miner, in order to "avoid a potential unnecessary and value destructive bankruptcy proceeding."

Core Scientific will not liquidate, but will continue its bitcoin operations normally, the CNBC report said Tuesday. It will also reach a deal with senior security note holders that hold the company's huge debt.

"The company is still generating positive cashflow, but that cash is not sufficient to repay the financing debt owed on equipment it was leasing," the unidentified person familiar with the company's confidential matters, said.

The bitcoin miner has suffered from this year's crypto rout and high electricity costs. In late October, Core Scientific suspended payments to lenders and suggested bankruptcy as an option.

The beleaguered miner has fallen over 98% in the previous year and, according to the financial data firm FactSet, BlockFi Lending LLC — a bankrupt crypto firm caught up in the FTX scandal — is another creditor to the miner.

Core Scientific mints proof-of-work cryptocurrencies like bitcoin, and has operations in various U.S. states, including North Dakota, North Carolina, Georgia, and Kentucky. The consistent slump in the price of BTC dropped the company's profitability.

"Operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs," Core Scientific said in an October filing.

The crypto winter has put many bitcoin miners under financial distress, including Greenridge, which said Tuesday that in a deal with its lender NYDIG, the firm needs $20 million in fresh funding through 2023 to avoid bankruptcy.

In September, Compute North, a crypto-mining data center, filed for bankruptcy revealing that the firm is struggling to survive amid slumping bitcoin prices and rising power costs.