Bitcoin Miner Greenidge Reaches Debt Restructuring Deal With NYDIG As Bankruptcy Looms

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Bitcoin mining company Greenidge Generation (GREE) has reached an agreement with its lender NYDIG on the restructuring of $74.7 million in debt, although bankruptcy is still on the cards.

Cash burn is unsustainable and the company’s board is engaged “in active discussions about the possibility and timing of a voluntary bankruptcy filing,” Greenidge said in a filing Tuesday with the Securities and Exchange Commission. United States Exchange Commission. If the deal with NYDIG is finalized, Greenidge still needs $20 million in funding through 2023 to avoid bankruptcy.

Under the agreement, which is currently in the form of a non-binding term sheet, NYDIG will purchase 2.8 exahash per second (EH/s) bitcoin mining machines from Greenidge and shut down 57 to $68 million in debt. This will leave Greenidge with 1.2 PE/s of machines, and the miner will also pledge the rest of its unencumbered assets to secure the remainder of the loan, which will be between $6 million and $17 million.

The loan in question had approximately $74.7 million outstanding as of September 30. Prior to entering into an agreement with NYDIG, Greenidge had estimated that it would need to spend a minimum of $66.5 million in principal payments throughout 2023.

Greenidge will host NYDIG’s machines, changing its business model from self-operating to hosting, according to the filing. Hosting has proven a difficult business model to sustain in 2022, especially for miners like Greenidge who are exposed to natural gas prices. Greenidge’s revenue costs, which come from both bitcoin mining and the sale of energy produced at its natural gas plant in upstate New York, rose 104% year-on-year quarterly in the third quarter, according to Greenidge’s Quarterly Earnings Report.

Greenidge is one of many miners who have warned about cash burn rates, including Argo Blockchain (ARBK) and Core Scientific (CORZ).

In October and November, Greenidge spent $8 million per month, including $5.5 million in NYDIG payments. It expects the same rate of cash burn for December, which would put a significant hole in its remaining $22 million of cash and cash equivalents. If Greendige does not secure funding, it could run out of cash within the next two months.

The story continues

The miner will host up to 74 megawatts (MW) of NYDIG machines. As of September 30, Greenidge “powers approximately 76 MW of mining capacity capable of producing an estimated aggregate hash rate of 2.4 PE/s.” The company owns a 106 MW natural gas-fired power plant in New York.

Greenidge will also transfer its coupons with machine maker Bitmain to NYDIG. Within three months of entering into the debt restructuring and hosting agreements, Greenidge will also transfer the machines awaiting deployment to NYDIG, and later provide the lender with an additional 39MW of hosting.

The miner has also faced regulatory turmoil in his home state of New York, where environmental concerns led to his air permit renewal being denied this summer.

UPDATE (December 20, 13:10 UTC): Adds additional details and information.

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