January 25, 2023

A US bankruptcy court has granted interim approval to Bitcoin (BTC) miner Core Scientific to access a $37.5 million loan from existing creditors to fund the company amid its liquidity problems.

Core Scientific is one of the largest cryptocurrency mining companies in the United States, but filed for Chapter 11 bankruptcy on December 21 due to rising energy costs, declining revenues and the price of BTC in 2022.

In a public statement issued the same day, Core Scientific outlined that it intends to “move quickly through the restructuring process” and continue its self-mining and hosting operations.

The loan comes from a group of creditors called the Ad Hoc Noteholder Group — which owns more than 50% of Core Scientific’s convertible bonds — who agreed to provide debtor-in-possession (DIP) facility commitment loans up to a total of $75 million, according to court documents.

The company’s application was approved Dec. 22, and court documents show that the DIP loan carries an interest rate of 10% per annum.

Core Scientific will have immediate access to $37.5 million to keep the lights on, while it plans to access the remaining $37.5 million in January according to a Dec. 23 report from Reuters, citing a corporate attorney.

However, the initial DIP budget predicted that it would request $12.5 million by January 21.

Core Scientific DIP budget: Stretto

The Reuters report also suggests creditors understand the challenges of the bear market and are looking at long-term play with Core Scientific.

Kris Hansen, a creditors’ representative, told the news outlet that existing stakeholders “have confidence” in the company’s future, despite the recent troubles.

In its third-quarter financial report, Core Scientific reported that it had $1.4 billion in assets and $1.33 billion in liabilities as of September 30, showing a tight balance sheet amid the bull market.

Related: Bitcoin Dives Below $16.7K as US GDP Meets New BTC Price ‘Death Cross’

Notably, the company reports a loss of $434.8 million in the third quarter, which when added to the losses of the previous two quarters, totals a loss of $1.71 billion year-to-date. As such, the company indicated at the end of November that it was most likely headed for bankruptcy without another cash injection.

The company reportedly has mined nearly 12,000 BTC this year, a significant improvement over the 5,769 BTC mined in 2021, but of course that hasn’t saved Core Scientific from its financial woes.