Core Scientific, Inc. Emerges from Chapter 11 with Strengthened Balance Sheet and Enhanced Competitive Position
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The completion of Core Scientific's Chapter 11 reorganization and the subsequent listing of its common stock and warrants on the Nasdaq Global Select Market represent a pivotal moment for the company. The restructuring has notably reduced the company's debt by $400 million, a significant deleveraging that could improve financial flexibility. The new credit facility and anticipated operating cash flow are expected to bolster liquidity, a critical factor for investors assessing the company's ability to sustain operations and invest in growth.
Moreover, the deployment of new Bitmain S19 XP and S21 bitcoin miners indicates an expansion in operational capacity, which could lead to increased bitcoin production. This expansion, coupled with the company's plan to increase capacity at its Texas data centers, suggests a strategic move to capitalize on economies of scale and potentially reduce operational costs per megawatt.
For shareholders and potential investors, the emergence from Chapter 11 is likely to be viewed as a positive development. The reduction in debt and the pathway to further balance sheet improvement may provide a more stable investment proposition, potentially leading to a reevaluation of the company's market valuation.
Core Scientific's position as a leading bitcoin miner and infrastructure provider for high-value compute in North America is significant within the cryptocurrency mining industry. The company's operational hash rate and its role as a hosting service provider underscore its market presence. The strategic deployment of new mining equipment could further enhance its competitive edge by increasing its hash rate and energy efficiency.
The bitcoin halving event, mentioned by CEO Adam Sullivan, is an industry-specific term referring to the reduction of bitcoin block rewards by half, which occurs approximately every four years. This event can affect the profitability of mining operations as it effectively reduces the rate at which new bitcoins are generated. Companies like Core Scientific that prepare for this event by improving operational efficiency and cost management may be better positioned to navigate the potential challenges associated with reduced mining rewards.
Investors may find the company's proactive approach to the upcoming halving and its plans for growth to be indicators of a strong strategic vision. However, the volatile nature of the cryptocurrency market and regulatory uncertainties remain factors that could impact the company's performance.
The emergence from Chapter 11 bankruptcy is not only a significant event for Core Scientific but also reflects broader economic implications for the cryptocurrency mining sector. The restructuring of debt and the potential for increased operational efficiency may contribute to the overall stability and sustainability of the sector, especially during periods of market volatility.
The company's growth plan, which includes significant infrastructure development, could have economic impacts beyond its balance sheet. It may lead to increased demand for energy and could stimulate local economies where the data centers are located. Additionally, the focus on transforming energy into high-value compute for bitcoin mining and other applications aligns with broader economic trends towards digital transformation and the monetization of computational power.
However, it's important to note that the cryptocurrency sector is subject to macroeconomic factors such as interest rates, inflation and technological advancements. These factors can influence the cost of capital and the demand for cryptocurrency, thereby affecting the profitability and strategic outcomes for companies like Core Scientific.
The Company maintains its position as one of the largest bitcoin miners in
Core Scientific is positioned as one of the largest bitcoin miners in
In addition to operating 16.9 exahash of energized hash rate for its bitcoin mining business as of December 31, 2023, Core Scientific also operated 6.3 exahash for its hosting business for a total of 23.2 exahash, making it one of the largest hosting service providers for bitcoin mining in
“This week marks an important step forward for us as we emerge, re-list and now focus all our energy on the exciting opportunities ahead of us,” said Adam Sullivan, Core Scientific Chief Executive Officer. “Throughout the reorganization process, the Company has maintained its position as one of the largest and most consequential bitcoin miners in
In 2023, Core Scientific produced 13,762 bitcoin from its owned fleet of miners and another 5,512 bitcoin on behalf of its hosting customers, some of which share proceeds with the Company. The Company is in the process of deploying and energizing approximately 27,000 new Bitmain S19 XP bitcoin miners and expects to deploy approximately 12,000 Bitmain S21 bitcoin miners before mid-year 2024. With 372 megawatts of partially developed infrastructure at its two
New Board of Directors
Core Scientific also announced its new Board of Directors, comprising six new independent directors, each of whom brings a wealth of experience, relevant expertise and fresh perspectives to the Company. These directors are:
- Todd Becker, President, Chief Executive Officer and Director of Green Plains Inc.
- Jeff Booth, Founding Partner at Ego Death Capital
- Jordan Levy, Managing Partner at SBNY (formerly SoftBank Capital NY) and Seed Capital Partners, Co-Managing Partner of Z80 Labs
- Jarrod Patten, Founder, President and Chief Executive Officer of global real estate advisory firm RRG, Director of Microstrategy Incorporated
- Yadin Razov, Founder and Managing Partner of Terrace Edge Ventures LLC
- Eric Weiss, Founder and Chief Investment Officer for Blockchain Investment Group LP and Bitcoin Investment Group LP
- Adam Sullivan, President and Chief Executive Officer of Core Scientific, Inc.
“We are honored to have such a distinguished and highly qualified board of directors to help guide our growth,” Mr. Sullivan added. “I look forward to working with each of our new directors to support our team as we execute our growth plan.”
For biographies of each director, please visit https://www.corescientific.com/team.
Core Scientific released a webcast updating key elements of its emergence, including its post-emergence capital structure and the recovery value to shareholders and noteholders, on January 22, 2024. A recording of the webcast can be found here and in the “Events & Presentations” section under the “Investors” link on the Company’s website.
Advisors
Weil, Gotshal & Manges LLP served as Core Scientific’s counsel. PJT Partners LP served as investment banker to Core Scientific. AlixPartners LLP served as restructuring advisor to Core Scientific.
Additional Information about the Restructuring Process
The full terms of the Plan and Disclosure Statement, as well as additional information about the chapter 11 filing, including court documents, can be found online free of charge at https://cases.stretto.com/CoreScientific. Stakeholders with questions may call Stretto at +1 (888) 765-7875 (
This press release is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security.
ABOUT CORE SCIENTIFIC
Core Scientific is one of the largest bitcoin miners and hosting solutions providers for bitcoin mining in
FORWARD LOOKING STATEMENTS AND EXPLANATORY NOTES
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of certain risks and other factors, which could include, but are not limited to, the following: risks and uncertainties relating to the Company’s ability to achieve significant cash flows from operations; the effects of the emergence from the Company’s chapter 11 cases on the Company’s liquidity, results of operations and business; the trading price and volatility of the Company’s common stock; the comparability of the Company’s post-emergence financial results to its historical results and the projections filed with the bankruptcy court in the Company’s chapter 11 cases; changes in the Company’s business strategy and performance, including as a result of changes to the Company’s board of directors or management; the possibility that the Company may be unable to achieve its business and strategic goals even now that the Company’s chapter 11 plan of reorganization is successfully consummated; the Company’s post-bankruptcy capital structure; attraction and retention of key personnel following emergence from the Company’s chapter 11 cases; the Company’s ability to achieve expected benefits from restructuring activities; restrictions on the Company’s operations contained in the agreements governing the Company’s indebtedness; the Company’s ability to generate sufficient cash to reduce its indebtedness and its potential need and ability to incur further indebtedness; actions taken by third parties, including the Company’s creditors and other stakeholders, as well as other risk factors set forth in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. These statements are provided for illustrative purposes only and are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company’s management. These forward-looking statements are not intended to serve, and must not be relied on by any investor, as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. These forward-looking statements are subject to a number of risks and uncertainties, including those identified in the Company’s reports filed with the
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FAQ
When will Core Scientific list its common stock, tranche 1 warrants, and tranche 2 warrants on the Nasdaq Global Select Market?
How much debt was reduced through the reorganization?
What is the total hash rate for Core Scientific's bitcoin mining business?
How many new Bitmain S19 XP bitcoin miners is Core Scientific deploying?
Who are the new members of Core Scientific's Board of Directors?
