Greenidge Generation Holdings Inc., a bitcoin mining operation, has entered into a restructuring agreement with NYDIG, according to an announcement made Tuesday. The non-binding terms sheet would allow NYDIG to acquire 2.8 Exahash per Second (EH/s) of the company’s mining capacity.
NYDIG and Greenidge Discuss Potential and Timing for Voluntary Bankruptcy Filing
The price of bitcoin in 2022 has been a cause for concern among miners, as the price has fallen below the cost of production and the network’s mining difficulty is extremely high. As a result, numerous interconnected bitcoin mining operations have been struggling with loan defaults and bankruptcies, creating a domino effect within the mining industry. On Tuesday, New York-based Greenidge Generation and NYDIG renegotiated a $74 million loan.
In the six months leading up to this agreement, Greenidge’s (NasdaqGREE) shares have dropped 88.91% against US dollars. According to GREE/USD market data, the stock has fallen by 35.58% in the past 30 days. Greenidge revealed it “entered a non-binding term sheet with NYDIG” and that the company would purchase 2.8 EH/s from the company’s mining machines. The New York-based miner also stated it will enter into a hosting agreement with NYDIG.
“Greenidge would enter into a hosting agreement with NYDIG for approximately 2.8 EH/s of mining capacity, which would result in a material change to Greenidge’s current business strategy and would result in Greenidge operating largely NYDIG-owned miners, instead of operating miners owned by Greenidge.” The company also detailed on Tuesday that NYDIG has outlined its plans to reduce the number of employees in exchange for Greenidge’s $74 million debt.
NYDIG would accept a reduction in debt of between $57 and $68 million in exchange for the purchase of miners and the transfer credits and mining infrastructure to NYDIG.
NYDIG is a major backer of bitcoin mining operations lending. They have lent over $300 million to companies such as Stronghold, Greenidge, Argo Blockchain, Iris Energy, and Core Scientific. The loan was secured by the ASIC mining machines of the companies. In addition, Tuesday’s restructuring update from Greenidge revealed that the US Securities and Exchange Commission (SEC) has received documentation indicating that Greenidge executives are discussing the potential and timing for a voluntary filing of bankruptcy.
According to bitcoin mining operations, bankruptcy could be possible if Greenidge discovers that it doesn’t have enough liquidity and its remaining capital dries up, unable to pay off any debt obligations. Any default on any debt or contract could result in bankruptcy.
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