Crypto Winter Bankrupts Core Scientific: Settles with Priority Power

Updated: 12 months

• Core Scientific filed for Chapter 11 bankruptcy due to falling revenue and low BTC prices.
• The firm agreed to settle by transferring $20.8 million of mining equipment to Priority Power Management.
• As part of the settlement, Core Scientific will also introduce potential buyers of its Texas facilities to Priority Power.

Crypto Winter Impacts Core Scientific

The crypto winter of 2022 forced many crypto-related establishments into financial stress leading to bankruptcy proceedings. Core Scientific was one of the firms affected by the 2022 market crash as it filed for Chapter 11 bankruptcy due to falling revenue and low BTC prices. The firm couldn’t withstand the heat of its failing revenue and increasing costs of operations, plus its case with the now-defunct Celsius Network.

Core Scientific Vs. Priority Power

Core Scientific was locked in a dispute with Priority Power Management over financial issues. David Jones, a Judge with the United States Bankruptcy Court in Sothern Texas, ruled on the case and Core Scientific has now agreed to settle by transferring $20.8 million worth of mining equipment to Priority Power. This equipment includes electrical items like transformers and circuit breakers. Also, Core Scientific will introduce potential buyers of its Texas facilities to Priority Power. Priority Power and the buyers will then have a channel of communication as well as retain the $514,000 earned from managing power for the BTC miner.

Implications Of The Ruling

On the other hand, Core scientific will repay the remaining balance owed in cash or an alternative form at their discretion when they receive funding from their post-bankruptcy reorganization plan or sale proceeds from their Texas facilities . Furthermore, this agreement releases both parties from any further claims related to this dispute going forward .

Priority Power’s Stake In The Agreement

Priority Power managed two Texas-based facilities requiring a 1,000 Megawatts upgrade prior to filing for bankruptcy protection in December 2021 . A Core Scientific executive named Michael Bros stated that they partnered with Priority Power in June 2021 which hoped to develop and manage energy needs on short notice . However, Bros stated that it became clear that these goals could not be achieved by May 2022 which is why payments were halted before filing for bankruptcy protection . In response, priority power claimed that it suffered significant losses amounting up too $30 million prior to December 11th’s filing date .

Conclusion

The agreement between Core scientific and priority power sets out a clear path for both parties moving forward with regards too debts owed along with future business dealings within each other’s organization . It is also important too note that core scientific must still wait until receiving funds through post-bankruptcy reorganization plans or sales proceeds from their texas facility before repaying priority power in cash or some other form per request at their own discretion .

Our Score