Bitcoin Miner Greenidge Reaches $74 Million Debt Restructuring Deal With NYDIG

Key Points:

• Greenidge will house the new equipment for NYDIG as part of the agreement to restructure debt totaling $74.7 million.
• To secure the remaining amount of the NYDIG loan, the company would pledge a sizeable chunk of its unencumbered assets as security.
• The miner spent $8 million each month in October and November, of which $5.5 million was used to pay the NYDIG.

Bitcoin miner Greenidge and its creditor, fintech company NYDIG, have agreed to restructure debt totaling over $74 million, according to a filing with the US Securities and Exchange Commission made on December 20.

The agreement, which takes the form of a non-binding term sheet, would substantially alter Greenidge’s present business model by moving it away from self-mining and toward hosting NYDIG’s mining rigs.

According to a filing on Tuesday with the U.S. Securities and Exchange Commission, the company’s board is actively discussing the possibility of filing for voluntary bankruptcy and the timing of such a filing since cash burn is unsustainable. Even if the agreement with NYDIG is approved, Greenidge will still require $20 million in new funding from now through 2023 in order to stay afloat.

With the arrangement, NYDIG would buy miners with a mining capacity of about 2.8 exahashes per second (EH/s) to be hosted by Greenidge, enabling NYDIG to get mining rights three months after the fulfillment of debt restructuring and hosting agreements.

The company would agree to a debt reduction of $57 million to $68 million for Greenidge in exchange for the miner purchases, the transfer of mining infrastructure and credits to NYDIG, and other considerations equating to those things.

As of September 30, the loan in issue still had a balance of around $74.7 million. Greenidge had predicted that it would have to fork up a minimum of $66.5 million in principal payments over the course of 2023 before coming to an agreement with NYDIG.

The filing showed that Greenidge would host NYDIG’s equipment, thereby switching its revenue model from self-mining to hosting. In 2022, hosting has shown to be a challenging economic model to sustain, especially for miners like Greenidge who are impacted by natural gas costs.

In order to secure the remaining amount of the NYDIG loan, Greenidge would also pledge a sizeable chunk of its unencumbered assets as security. The company would continue to be the owner of miners with a 1.2 EH/s capacity. Greenidge has a 2.5 EH/s mining capability as of October 31, 2022, with around 24,500 active miners.

The miner’s financial situation is still unknown, and there is a serious question about its capacity to continue as a going concern, the company added in its filing. It spent almost $8 million of its funds on operations last month, of which $5.5 million was used to pay principal and interest. The company had a cash balance of about $22 million as of November 30, 2022.

Greenidge further cautioned that although NYDIG and the company will make an effort to sign legal documents that contain the terms described in this release, there can be no assurances that these terms won’t change significantly or that the transactions discussed in this release will actually take place.

Argo Blockchain and Core Scientific are two more miners who have cautioned about currency burn rates, in addition to Greenidge.

As Coincu reported, Greenidge had been seeking to increase capital by up to $22.8 million.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Website: coincu.com

Harold

Coincu News