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In a significant development during Core Scientific's financial reorganization phase, cryptocurrency storage firm Anchorage Digital and prominent miner producer Bitmain are considering acquiring equity in the company.
Documents presented to the U.S. Bankruptcy Court for the Southern District of Texas on August 8 unveiled Bitmain's plan to provide Core Scientific with 27,000 S19j XP Miners. The proposed deal involves an exchange of around $23 million in tangible cash along with an additional $54 million in the form of company equity.
What sets Anchorage Digital apart is its decision to pursue equitization for its claim, a unique approach compared to other companies such as BlockFi and Mass Mutual Asset Finance, which opted for negotiated settlements for their claims.
As part of the ongoing financial restructuring, the proposed plan will undergo a creditor voting process before receiving official approval. Insiders suggest that this plan could potentially reduce the company's capital requirements by more than $30 million. This reduction is attributed to the choice of equity over direct cash and the finalization of a deal with Celsius Network.
Backgrounding this situation, Core Scientific filed for Chapter 11 bankruptcy in December 2022, prompted by declining Bitcoin prices and decreased revenue streams. Speculation about the company's financial health had arisen earlier, amplified by the downturn of Celsius and the overall cryptocurrency market. Despite these challenges, Core Scientific continued its mining operations, maintaining its stance in the cryptocurrency mining sector.
The decision to undergo financial restructuring highlights the inherent volatility of the cryptocurrency domain. The potential involvement of Anchorage Digital and Bitmain underscores the perceived value in Core Scientific despite its recent hurdles. Both these industry leaders acknowledge the future potential of cryptocurrency mining, even amid challenges.
