Bitcoin (BTC) mining company Core Scientific has announced its deal with crypto investment firm NYDIG which will see it significantly lower its debt to the lender. According to details of the agreement, the miner will sell over 27,403 of its machines to NYDIG, to offset its outstanding debt of about $38.6 million. In addition, the BTC miner is considering several opportunities to sell up to 1 gigawatt of its mining facilities, which will in turn reduce rack space.
According to the motion filed by the company, these machines are no longer necessary and needed by the firm for its current operations and future business and transactions plans, as such, it would be better to sell them off as they will be beneficial to the crypto trading firm.
Despite the fact that B. Riley Financial Inc. offered to give the Bitcoin miner a $72 million loan in December to offset its debt, the firm still filed for bankruptcy.
Even though the mining firm had a positive cash flow, it could not pay for its mining equipment, and the cost of electricity, this amongst others caused its bankruptcy. However, a few days ago, the bankruptcy Judge approved the miner’s plan to replace its loan with new financing from B. Riley.
NYDIG Strike Deals with Debtors to Lower Loan Obligations
Several factors including high energy costs and a decline in market prices have made the mining subsector less profitable and threatened the operations of many players who are neck-deep in debt.
As of the end of last year, mining data analysis from Hashrate Index shows that the top 10 mining companies including Core Scientific owe $2.6 billion. Greenidge, another embattled Bitcoin miner, recently entered a deal to reduce its loan obligations to the crypto investment firm. The miner who is considering filing for Bankruptcy protection reduced its debt by $61 million after the deal.
Just like Core Scientific, Greenidge’s deal also entails the sale of some mining infrastructure and equipment in addition to transferring about 2.8EH/s mining capacity to NYDIG.
However, Greeenidge’s debt could be reduced by a further $7 million on the condition that the miner secures the right to a new mining site within the next three months for NYDIG.
