Bankrupt cryptocurrency company set to continue mining operations in Grand Forks

January 6 – GRAND FORKS – Core Scientific Inc., a Texas-based cryptocurrency mining company, is expected to continue mining operations at its Grand Forks data center through a Chapter 11 bankruptcy filing.

On Dec. 21, Core Scientific announced it was voluntarily seeking Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas, which will allow the company to reorganize its finances. According to court documents, the company posted a net loss of approximately $434.8 million for the three months ending September 30.

In a Jan. 6 email, Russell Cann, head of mining at Core Scientific, said the reorganization primarily affects the company’s balance sheet, not day-to-day data center operations.

“Our business model, the day-to-day operations of our facilities and our corporate structure will continue to operate as normal,” Cann said. “Grand Forks operations and employees should not be affected by this procedure.”

Keith Lund, president and CEO of the Grand Forks Region Economic Development Corporation, said EDC has been in contact with Core Scientific since the bankruptcy filing was announced.

“They report that the Grand Forks project was one of their best, and they plan to continue operations through the Chapter 11 process,” Lund said. “Time will tell, but that’s the wait.”

In June 2021, the Grand Forks Growth Fund approved a loan of nearly $270,000 for Core Scientific to redeem interest on commercial loans the company took out from Bremer Bank. The grant was to leverage a $500,000 grant from the Bank of North Dakota through the PACE program.

Lund says the company hasn’t moved forward with that loan. A 2021 annual report published by the Grand Forks Growth Fund indicates that Core Scientific advised Growth Fund staff that it was not comfortable with the security terms offered by the Growth Fund.

Because the loan was never finalized, Core Scientific did not receive the $500,000 grant from the Bank of North Dakota, Grand Forks City Administrator Todd Feland confirmed. The loan and the grant are two parts of a partnership loan under the PACE program.

The bankruptcy filing was necessitated by the falling price of bitcoin, rising electricity costs and the failure of some of its hosting customers to meet their payment obligations, Core Scientific said in a press release. . The price of bitcoin has fallen over 60% in the past year. Court documents allege that cryptocurrency firm Celsius Mining LLC, one of Core Scientific’s largest hosting customers, has nearly $7 million in unpaid debts to the company. Celsius filed for Chapter 11 protection in July 2022.

Cann compared Core Scientific’s restructuring process to those of Hertz, Chrysler and Delta Airlines when those companies filed for Chapter 11 bankruptcy.

“The company will continue to operate during the process, restructure its balance sheet and hopefully prosper once the process is complete,” he said.

The Grand Forks facility is one of six fully operational Core Scientific data centers. Others are located in North Carolina, Georgia and Kentucky. Cann said the Grand Forks site mines 10 bitcoins per day.

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