Motion to Sell $6 M Plus Bitmain Coupons Filed by Core Scientific

Not everything is going well for bitcoin mining firms; they all suffer from a trifecta of issues. Rising energy prices, increasing difficulty level, and decreasing BTC value. All these factors are responsible for their hardships. On January 25, 2023, Core Scientific filed an emergency motion seeking permission to sell Bitmain coupons worth $6.6 million. 

The filing states that some conditions applied to the said coupons make them useless for Core Scientific’s business. Categorically, the coupons can “only be used to pay 30% of any new order of S19 Miners from Bitmain, and cannot be exchanged with Bitmanin for cash.”

S19 models provide a comparatively lower hash rate output than Bitmain’s recent models. The company claims that “The Debtors do not believe that utilizing their liquidity to purchase new S19 Miners, even with the availability of the Bitmain Coupons, is the best use of Debtor’s cash.”

Also, the said coupons would expire between March and April 2023, hopefully by the time the company would be out of chapter 11 bankruptcy. They would not acquire any new S19 miners under Chapter 11 or even after that. 

Other than the motion submitted, the company is discussing with Bitmain and another two potential parties interested in buying the coupons at a discounted price. Particularly for the sale of $1.9 million of Bitmain Coupons for only $285,000, along with the sale of another $4.8 million worth of coupons for just $713,000. If carried out as planned, this sale might add an aggregate of nearly $1.0 million to their balance sheets, much required at the moment. 

Core Scientific adds that, even though the purchase price is nearly $1.0 million, it represents a considerable discount to approx. $6.7 million face value Bitmain coupon. In the harsh crypto winter of 2022, prices of S19 Miner went down as more and more of them were being offered at a discounted price. As a result, the coupons are offered at just 15% to 25% of their face value.

Before filing for Chapter 11 bankruptcy on December 21, 2022, Core Scientific was among the largest cryptocurrency mining companies in the United States. The reasons pointed out were rising energy costs slump in the BTC prices, causing even more revenue decline. The company recently obtained court approval for accessing a $37.5 million loan from existing creditors during ongoing liquidity issues. 

Miners worldwide face problems; Texas-based Compute North filed for bankruptcy in September 2022. Argo Blockchain had to make a deal with Galaxy Digital and sell its Helios mining facility in Texas for $65 million with a loan of $35 million to avoid bankruptcy. 

Iris Energy is also struggling to stay afloat; they are looking to either expand the hash rate from 2 EH/s to 5.4 EH/s or would go for third-party hosting. Greenridge also entered a non-binding agreement to settle a $74 million debt with NYDIG. 

Latest posts by Ritika Sharma (see all)