Crypto Miner Core Scientific Sees Stock Surge 200% on Creditor Offer to Fund Insolvency

UTC by Tolu Ajiboye · 3 min read
Crypto Miner Core Scientific Sees Stock Surge 200% on Creditor Offer to Fund Insolvency
Photo: Depositphotos

Core Scientific experienced a four-day stock surge after one of its creditors offered to pull it out of its financial mess.

Core Scientific (NASDAQ: CORZ) recently experienced a 200% stock surge over the past four days. The digital asset minting facilitator and blockchain infrastructure provider has endured difficult times throughout 2022. As the current crypto winter prevails, Core Scientific has seen positive reception from a current creditor regarding a recent financing proposal. Should this deal sail through successfully, the miner might avoid bankruptcy.

Core Scientific stock jumped from 13 cents on December 12th before the surge, to nearly 40 cents upon market close on December 16th. This remarkable climb in such a short time represents a gain of 198%.

Financial media firm Marketbeat reported that traders acquired 6,572 call options yesterday, which represents 136% more than the 2,780 average volume. In addition, the development indicates an overwhelming bullishness on CORZ and a belief that the stock will keep rising.

As evidenced on Twitter, some members of the Bitcoin (BTC) community also acquired shares in anticipation of a massive return. However, whether or not the Core Scientific rally marks the beginning of a turnaround or a further price plummet is currently unknown. Despite recent gains, Core Scientific stock is at a 95% drawdown year-to-date.

B.Riley Offers Rescue Plan to Core Scientific

Financial services platform B. Riley (NASDAQ: RILY) recently issued a letter outlining a $72 million financing plan to Core Scientific’s shareholders and lenders. According to the plan, which B.Riley opines is sufficient enough to save Core Scientific from bankruptcy, stated:

“B. Riley has proposed to Core Scientific’s Board of Directors that it would provide $72 million in new, non-cash pay financing on favorable terms, providing more than two years of runway for the Company to achieve profitability. This is a far superior approach for all constituents, one that would avoid bankruptcy while preserving meaningful value for all of Core Scientific’s stakeholders.”

Further detailing the cornerstones of the rescue plan in the letter, B.Riley also explained:

“Our proposal is simple. It provides sufficient liquidity to avoid bankruptcy. B. Riley’s proposal does not purport to haircut amounts owed to the Company’s equipment lenders. B. Riley is prepared to fund the first $40 million of financing immediately, with zero contingencies.”

B.Riley analyst Lucas Pipes, who has been following Core Scientific since February this year, provided findings and forecasts. According to Pipes, the embattled Bitcoin miner could generate annual earnings topping $165 million at a BTC price of $18K. In addition, the B.Riley analyst also said that Core Scientific could further pull in an extra $20 million on every $1,000 price increase.

B.Riley concluded its letter by imploring Core Scientific’s board of directors to accept its offer to help promptly. According to the capital market company, this gesture would achieve a resolution that benefits all Core Scientific stakeholders involved.

Core Scientific Stock Surge Comes after Company Threatened to Default on Loans

Before the B.Riley development and subsequent stock surge, Core Scientific had threatened to default on some of its debts due to several factors. In addition to a contracting crypto marketplace, other factors were high energy rates and a likely loan default from Celsius. The crypto lender filed for Chapter 11 Bankruptcy back in July.

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Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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