Greenidge and NYDIG jointly signed a non-binding debt restructuring agreement
Greenidge and NYDIG jointly signed a non-binding debt restructuring agreement. As a result of this deal Greenidge entered into a hosting deal with NYDIG.
Greenidge Generation Holdings Inc., a bitcoin mining company, has completed a restructuring agreement with its creditor, fintech firm NYDIG according to a recent filing with the United States Securities and Exchange Commission. As a result of the deal, Greenidge will transition from self-mining to hosting NYDIG's mining rigs, a big change in its business model. Recently, the New York-based Greenidge Generation and NYDIG revised their agreement about a $74 million loan.
Under the non-binding term sheet agreement, Greenidge will sell 2.8 exahashes per second (EH/s) of its mining capacity to NYDIG, and for the same amount of EH/s, Greenidge has agreed to host NYDIG. By completing debt restructuring and hosting agreements within three months, NYDIG would have access to a mining site.
The firm would agree to a debt reduction of $57 million to $68 million for Greenidge.
However, Greenidge also noted that while NYDIG and Greenidge will attempt to sign legal documents containing the terms indicated in this release, there can be no promises that these terms won't alter dramatically or that the transactions discussed in this release will really take place.
Greenidge spent almost $8 million of its funds for 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.
Stronghold, Greenidge, Argo Blockchain, Iris Energy, and Core Scientific are just a few of the companies to which NYDIG has provided more than $300 million in support of bitcoin mining operations. The companies' application-specific integrated circuit (ASIC) mining equipment served as collateral for the loans.
Along with the restructuring update, Greenidge also submitted paperwork to the U.S. Securities and Exchange Commission (SEC) stating that its executives are actively discussing the possibility and timing of declaring voluntary bankruptcy.
According to the bitcoin mining operation, bankruptcy may occur if Greenidge learns it lacks adequate liquidity, runs out of money, is unable to pay its bills, or defaults on any contracts or payments.
Since the price of bitcoin (BTC) has fallen below its cost of production and the network's mining difficulty is quite high, bitcoin miners have been severely impacted by financial issues in 2022. In addition, a number of linked bitcoin mining businesses have been suffering from loan defaults and bankruptcies, which have spread throughout the mining sector.
CBW - External Analyst