Core Scientific(US:CORZ)2023-04-04 01:36Business Operations - The company operates in two segments: "mining" for its own account and "hosting and equipment sales" for third-party clients[26]. - The company completed the acquisition of Blockcap in July 2021, significantly expanding its self-mining operations and increasing its miner ownership[40]. - The company focuses on enhancing its third-party colocation business and increasing the efficiency of its self-mining fleet to drive revenue growth[27]. - The company has established agreements with Bitmain for the supply of mining equipment, which is critical for its mining operations[45]. - The company’s business operations date back to 2018, originally known as "Core Scientific," and underwent a merger to become "Core Scientific, Inc." in 2021[85]. Mining Operations - As of December 31, 2022, the company had deployed approximately 234,000 bitcoin miners, consisting of approximately 153,000 self-miners and 81,000 hosted miners, achieving a total hashing power of 15.7 EH/s for self-miners and 8.0 EH/s for hosted miners[44]. - The current fixed reward for solving a new bitcoin block is 6.25 bitcoin, which is expected to halve to 3.125 bitcoin in early 2024[35]. - As of December 31, 2022, the company held 43.55 bitcoin, with a carrying value of $0.7 million, all produced from its bitcoin mining operations[600]. - The company cannot accurately predict the future market price of bitcoin, which may affect revenue and could lead to impairment losses[602]. Power and Facilities - The company has approximately 592 MW of operating electric power across its data centers as of December 31, 2022[38]. - The Company operates its "Marble 1" facility with power rates governed by MEPB's published rate schedule, which is historically stable with some month-to-month variability[49]. - The Marble 2 facility in North Carolina has a power capacity of up to 69,000 kW under a Master Services Agreement with Duke Energy Carolinas, LLC[51]. - The Company operates two facilities in Dalton, Georgia, with a total power capacity of 195,000 kW, governed by an Electric Service Agreement with Dalton Utilities[53]. - The Calvert City facility operates at a power capacity of up to 150,000 kW under a Firm Power Contract with the Tennessee Valley Authority[55]. - The Grand Forks facility in North Dakota has a power capacity of 100,000 kW, with operations beginning in June 2022[57]. - The Power Purchase Agreement with the City of Denton provides for an electrical power capacity of up to 297,000 kW for a term of seven years[59]. Financial Restructuring - The Company filed for Chapter 11 bankruptcy on December 21, 2022, and continues to operate as "debtors-in-possession" under the jurisdiction of the Bankruptcy Court[76]. - The Company entered into a restructuring support agreement with noteholders representing more than 70% of its convertible notes, committing over $57 million for a debtor-in-possession facility[77]. - The Replacement DIP Facility provides a non-amortizing super-priority senior secured term loan facility with an aggregate principal amount not to exceed $70 million[79]. - $35 million was made available following Bankruptcy Court approval of the Interim DIP Order and another $35 million following approval of the Final DIP Order[81]. - Loans under the Replacement DIP Facility will bear interest at a rate of 10%, payable in kind in arrears on the first day of each calendar month[81]. - The maturity date of the Replacement DIP Credit Agreement is December 22, 2023, with a possible extension to March 22, 2024[82]. - The Bankruptcy Court has appointed two official committees: the Creditors' Committee and the Equity Committee, which represent unsecured creditors and equity security holders respectively[83]. - The Replacement DIP Credit Agreement includes representations, warranties, covenants, and events of default that could lead to immediate repayment of obligations[81]. - The company anticipates that proceeds from the Replacement DIP Facility and ongoing cash from operations will support its restructuring efforts and cover legal and financial advisory fees[78]. Market Overview - The market for digital assets has grown from an estimated 2.7 million users in 2017 to approximately 100 million users today[32]. - Bitcoin's market capitalization exceeded $875.9 billion as of December 31, 2021, with trading prices ranging from a high of $48,086.84 in March 2022 to a low of $15,599.05 in November 2022[32]. Intellectual Property - The Company has filed over 70 patent applications and obtained issued patents in technologies such as blockchain and data center management[66]. Workforce - As of December 31, 2022, the Company had 235 full-time employees located in the United States[75].