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Investment giant BlackRock (BLK) has committed $17 million to bankrupt bitcoin miner Core Scientific (CORZ), which is part of a new $75 million loan from the miner’s secured convertible note holders, according to a U.S. Securities and Exchange Commission filing that was filed on Dec. 29.
BlackRock, which is Core Scientific’s largest shareholder according to FactSet data, already held $37.9 million in secured convertible notes as of Dec. 28. The latest $17 million is part of the new $75 million convertibles notes, which is part of its prearranged bankruptcy process, the filing says. In a prearranged bankruptcy, the debtor reaches some sort of agreement with its debtee before officially filling for bankruptcy.
Coming after months of turmoil for the crypto mining industry, which has been squeezed between low prices hurting revenue and higher energy costs lifting expenses, the largest miner by computing power filed for Chapter 11 on Dec. 21. The miner noted that it expects support from some of its convertible noteholders in the form of two debtor-in-possession (DIP) facilities, totaling up to $75 million.
According to the restructuring plan, the secured debt convertible noteholders will get equity. The current equity and unsecured holders will get warrants such that as the company grows, they will get more shares, its chief mining officer Russell Cann told CoinDesk.
Out of the total $75 million, the lenders have already committed $57 million, including BlackRock’s new loan, to the miner. The DIP facility has a maturity date of June 21, 2023 with terms to extend to Sept. 21, according to the new filing.
Shares of Core Scientific were down close to 6% to $0.0773 on Friday afternoon.
Core first warned of the risk of bankruptcy in late October, and said it wouldn’t be paying some of its loan installments, sending its shares plummeting about 80% on Nasdaq. In November, it reiterated that it may run out of money by the end of this year. Compute North, another major firm in the space, filed for Chapter 11 bankruptcy in late September, while peer Argo Blockchain (ARBK) narrowly avoided bankruptcy after getting a $100 million bailout from Mike Novogratz’s Galaxy Digital this week.
BlackRock, Vanguard and Fidelity are among few of the TradFi giants that invested in bitcoin miners during the bull run as shares of publicly traded miners offered a faster way to get exposure to the sector, without having to buy actual bitcoins in the face of an uncertain regulatory environment.
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