(Reuters) – U.S. bitcoin miner Core Scientific received court approval on Thursday to fund its Chapter 11 case with a $37.5 million loan from a group of existing creditors.
U.S. Bankruptcy Judge David Jones approved Core Scientific’s bankruptcy loan on an interim basis at a court hearing in Houston, Texas. The company will seek final approval of the loan and permission to borrow an additional $37.5 million in January, although the company’s attorney said it is open to better financing offers from other lenders.
Kris Hansen, who represents the creditors extending the new loan, said in court that existing stakeholders continue to have faith in Core Scientific’s long-term viability despite the company’s recent challenges and bitcoin’s falling price.
After rapid growth in 2020 and 2021, bitcoin – the most popular digital currency by far – is down more than 60% this year, pressuring the crypto mining sector.
Austin, Texas-based Core Scientific filed for bankruptcy on Wednesday, blaming the sharp decline in bitcoin prices, rising energy costs for bitcoin mining and a $7 million unpaid debt from U.S. crypto lender Celsius Network, one of its biggest customers.
The company said in court filings that it would not liquidate and intends to pursue a restructuring backed by creditors who hold over 50% of the company’s convertible notes.
It is one of the largest cryptocurrency mining companies in the United States, and it mints bitcoins both for itself and for customers, such as Celsius, which owns computers at Core Scientific’s facilities.
Celsius, which filed for bankruptcy protection in July, had argued that U.S. bankruptcy law prevented Core Scientific from charging it for higher electricity costs under the two companies’ bitcoin mining agreement. Now that Core Scientific is also bankrupt, attorneys for both companies said at the hearing they hoped to settle the dispute.
Celsius is “very invested in the long-term future of Core,” said Chris Koenig, an attorney for Celsius.
