Amid its current bankruptcy proceedings, crypto miner Core Scientific has agreed with NYDIG to pay down its $38.6 million debt by giving over about 27,403 computers that were used as security.
The motion was filed to Southern District U.S. Bankruptcy Court for Texas on Thursday. It aimed to seek the go-ahead from the company, stating that the transaction would be beneficial because the rigs in question are “no longer necessary” for its “current operations and future business plans.”
Core Scientific’s recovery plan
It was said that the principal of the NYDIG Debt is more than the value of the ASICs Collateral. The ASICs Collateral comprises older versions of Miners, which, compared to current models like S19 XP Miners, have lesser hash rates. Over the previous year, the value of most equipment fell by more than 80 percent.
In addition, the business is evaluating the potential to sell parts of its mining operations, which would reduce the amount of available rack space. In December, Russell Cann, the chief mining officer, said that there is a possibility that up to one gigawatt of assets may be put up for sale.
The agreement terms
The court-approved Core Scientific’s agreement with B. Riley for a loan of $70 million at a hearing that took place this week. According to the motion, the new contract will provide the company “up to 15 months of runway and tremendous flexibility” since it does not have any “plan-related milestones,” nor is it contingent on the company obtaining approval for any particular Chapter 11 plan.
Following filing the bankruptcy petition in December amid its troubles late last year, representatives of the firm said at a meeting held in the bankruptcy court on Wednesday that there has been a “substantial” improvement in the company’s cash flow.
Many cryptocurrency firms are amid the 2022 bear market, with bitcoin miners affected the most. The effect on miners is being felt hard due to the plunge experienced in bitcoins price last year amid the FTX crisis that caused markets to see one of the worst crypto bear markets.