GRAND FORKS – Core Scientific Inc., an American-based cryptocurrency mining company, is likely to continue its mining activities at its Grand Forks Data center despite filing for Chapter 11 bankruptcy.
On December 21, Core Scientific made an announcement that it would be seeking Chapter 11 protection in the US Bankruptcy Court Southern District Of Texas. This allowed the company to reorganize its finances. According to court documents, Core Scientific reported a net loss of more than $434.8 million for the three-month period ending March 31, September 30.
In a Jan. 6 email, Russell Cann, Core Scientific’s head of mining, stated that the restructuring only affects the company’s balance sheet and not its day-to-day operations at data centers.
“Our business model, the day-to-day operations of our facilities and the corporate structure will continue to function as normal,” Cann said. “Grand Forks operations and employees should not be adversely affected by this proceeding.”
Keith Lund, President and CEO of the Grand Forks Region Economic Development Corporation, said the EDC has been in contact with Core Scientific since the bankruptcy filing.
“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 expectation.”
In June 2021, the Grand Forks Growth Fund approved a loan of nearly $270,000 to Core Scientific to lower the interest rates on their business loans from Bremer Bank. This grant was intended to leverage a $500,000 grant from the Bank Of North Dakota through the PACE Program.
According to the company, they didn’t take out that loan. The 2021 annual report from the Grand Forks Growth Fund states that Core Scientific informed the Growth Fund staff that they were not satisfied with the security terms provided by the Growth Fund.
Since the loan was not finalized, Core Scientific did not receive the $500,000 grant from the Bank Of North Dakota, according to Grand Forks City Manager Todd Feland.
The bankruptcy filing was caused by the drop in bitcoin’s price, a rise in electricity prices and failure to pay its hosting customers. Core Scientific reported in a press release that the bitcoin price fell by more than 60% within one year. Court documents show that a cryptocurrency company, Celsius Mining LLC is claiming Core Scientific owes them nearly $7 million, its largest hosting client. Celsius declared Chapter 11 protection in July 2022.
Cann compared Core Scientific’s restructuring process to that of Hertz, Chrysler and Delta Airlines who all 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 stated.
One of the most important aspects of facility management for Core Scientific is its six fully functional data centers. These are located in North Carolina, Georgia and Kentucky. Cann reported that the Grand Forks location mines 10 bitcoins each day.