GRAND FORKS โ 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 December 21, Core Scientific announced that it would voluntarily seek Chapter 11 protection in the US Bankruptcy Court for the Southern District of Texas, allowing the company to reorganize its finances. According to court documents, the company had a net loss of approximately $434.8 million for the three months ending September 30.
In a Jan. 6 email, Russell Cann, Core Scientific's head of mining, said the reorganization primarily affects the company's balance sheet, not 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 news of the bankruptcy filing.
โThey report that the Grand Forks project was one of their best and they plan to continue operations through the Chapter 11 process,โ 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 for Core Scientific to reduce interest on business loans the company obtained 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 go through with that loan. A 2021 annual report published by the Grand Forks Growth Fund says Core Scientific informed 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 Manager Todd Feland confirmed. The loan and the grant are two parts of an associated loan through the PACE Program.
The bankruptcy filing was necessitated by the decline in the price of bitcoin, the increase in electricity costs and the failure to meet payment obligations by some of its hosting customers, Core Scientific said in a press release. The bitcoin price fell more than 60% in the last year. Court documents allege that cryptocurrency company Celsius Mining LLC, one of Core Scientific's largest hosting clients, owes the company an unpaid debt of nearly $7 million. Celsius filed for Chapter 11 protection in July 2022.
Cann compared Core Scientific's restructuring process to that 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 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 bitcoins per day.
