Bankrupt cryptocurrency company expected to continue mining operations in Grand Forks
Jan. 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 that 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 filings, the company had a net loss of approximately $434.8 million for the three months ending in Sept. 30.
In an email on Jan. 6, Russell Cann, head of mining at Core Scientific, said the reorganization primarily affects the company's balance sheet, not daily operations at data centers.
"Our business model, day-to-day operations of our facilities and corporate structure will continue functioning as normal," said Cann. "The Grand Forks operations and employees should not be adversely impacted by this procedure."
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 news of 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," said Lund. "Time will tell, but that's the expectation."
In June 2021, the Grand Forks Growth Fund approved a nearly $270,000 loan for Core Scientific to buy down interest on commercial loans the company took out with Bremer Bank. The grant was intended to leverage a $500,000 grant from the Bank of North Dakota through the PACE Program.
Lund says the company did not move forward with that loan. A 2021 Annual Report published by the Grand Forks Growth Fund says Core Scientific informed Growth Fund staff it was not comfortable with security terms offered by the Growth Fund.
Because the loan was never finalized, Core Scientific did not receive the $500,000 Bank of North Dakota grant, confirmed Grand Forks City Administrator Todd Feland. The loan and grant are two parts of a partnered loan through the PACE Program.
The bankruptcy filing was necessitated by the decrease in the price of bitcoin, the increase in electricity costs and failure of some of its hosting customers to honor payment obligations, Core Scientific said in a press release. The price of bitcoin fell by more than 60% in the last year. Court documents allege cryptocurrency company Celsius Mining LLC, one of Core Scientific's largest hosting customers, has nearly $7 million in unpaid debt 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 after the process is complete," he said.
The Grand Forks facility is one of Core Scientific's six fully operational data centers. Others are located in North Carolina, Georgia and Kentucky. Cann said the Grand Forks location mines 10 bitcoin per day.