bitcoin (BTC) Shares of mining company Core Scientific have soared nearly 200% in the past four days, following the positive reception of a December 14 financing proposal from a current creditor who hopes the company can avoid bankruptcy.
Shares of the struggling miner were just over 13 cents on December 12, before rising to almost 40 cents when the market closed on December 15, a gain of 198%.
According to financial media firm Marketbeat, traders acquired 6,572 call options on December 15, 136% higher than the average volume of 2,780, indicating that many are bullish on the stock and bet the price will continue to rise.
Some members of the Bitcoin community were also buying shares, hoping for a big return if the financing plan goes through and the company can survive through the bear market.
I bought a slug from $CORZ at close If the financing takes place and they can survive through the bear market, this trade could turn out to be an absolute MONSTER. DYOR. For your reference: pic.twitter.com/eHF4NXjcvH
—CR (@CashRocket) December 14, 2022
The rally could be the start of a turnaround, or just a dead cat bounce. Core Scientific received a series of bad news throughout 2022, and despite recent gains, the price is still 95% lower than it was at the beginning of the year.
On December 14, financial services platform B. Riley wrote a letter to Core’s shareholders and lenders, outlining a $72 million financing plan which he believes is enough to prevent the miner from being forced to file for Chapter 11 bankruptcy.
If the deal is accepted, the first $40 million will be funded “immediately, without contingencies,” while the rest of the funds will be issued if Core agrees to suspend payments to equipment lenders until the price of Bitcoin breaks above the limits again. $18,500. The price of the leading cryptocurrency has been down since November 9.
B. Riley suggests that the funding will provide Core with two years of operating cash, noting that his analyst forecasts that the miner can generate annual earnings of approximately $165 million at a Bitcoin price of $18,000, with an additional $20 million for each price increase. of $1000.
Related: How difficult has this bear market been for Bitcoin mining? Watch the market talks on Cointelegraph
Core was hit hard by the broader market downturn and filed a report on Oct. 26 citing a low BTC price, high electricity fees and a refusal by bankrupt crypto lender Celsius to repay a $2.1 million loan as reasons why you might non-payment of some of your debts.
The bad news continued on November 22, when the miner admitted in a quarterly report that its cash reserves could be sold out end of 2022 and did not believe that it could raise funds through financing or capital markets given current market conditions.