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Celsius Contagion?: Another Crypto Miner Expected To File Bankruptcy – Fin Tech – United


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In an earlier post we discussed the bankruptcy filing of Compute
North Holdings, Inc., a bitcoin miner felled by high electricity
costs and falling cryptocurrency prices (see here). It may be followed shortly by another
miner, Core Scientific, Inc., which announced on October 26, 2022
that it has similarly been severely impacted by rising electricity
costs and the price of bitcoin. It also noted increases in the
“global bitcoin network hash rate” as well as ongoing
litigation with Celsius Networks and its affiliates. The company,
whose stock is listed on NASDAQ under the symbol CORZ, is engaged
in a battle with Celsius regarding the latter’s failure to pay
certain “utility tariffs” purportedly owing in relation
to the hosting of Celsius’ mining equipment at Core
Scientific’s data centers, among other things. In a filing earlier this month in Celsius’
bankruptcy case, Core Scientific asserted that it was “losing
approximately $1.65 million per month subsidizing Celsius’s
business.” A hearing on Core Scientific’s demand that
Celsius pay these administrative expenses, among other things, has
been scheduled for November 9, 2022 in Celsius’ case. Core
Scientific may have commenced its own case by that time.

In its 8-K, Core Scientific announced that it will be
unable to make certain upcoming payments under financing
arrangements. Such failure may lead to defaults under its other
indebtedness, including two series of convertible notes. They have
hired restructuring advisors and announced that alternatives
include the filing for bankruptcy. As of the date of the 8-K, the
company was holding 24 bitcoins and approximately $26.6 million in
cash.

Meanwhile, Compute North Holdings’ case has progressed
rapidly. The company is engaged in a sale process and has scheduled
an auction to begin on November 1, 2022.

We will provide further updates as on these matters as
circumstances warrant.

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