Bankrupt crypto miner Core Scientific would transfer its ownership of 27,403 mining machines to crypto lender NYDIG to pay off a $38.6 million loan, according to a Feb. 2 court filing.
Core Scientific said the transferred machines are “no longer necessary” for its “current operations and future business plans.” It added that the “principal of the NYDIG Debt exceeds the value the ASICs Collateral.”
Core Scientific explains decision
Core Scientific rationalized the agreement, saying the machines consisted of older models with lower hash rates than newer models.
While it conceded that the transferred assets would have an “immediate negative impact” on its revenue and EBITDA, the firm believes the loss is outweighed by the long-term “improved profitability and sustainability” of its operations.
Meanwhile, it noted that this loss could be mitigated by installing some currently unused Bitcoin (BTC) mining machines in its storage. It added that its machine, “S19 XP,” is more efficient than the ones it lets go of.
Another reason it gave for transferring its right to the machines was that it wanted to sell certain mining facilities. The bankrupt firm said selling the older devices would provide enough rack space to contain the newest models of miners.
The final reason it gave for its decision was that the value of the ASIC miners has “dropped considerably.” It could purchase the same kind of machines for $25 million — which is considerably lower than the debt NYDIG is writing off, according to the firm.
Recently, NYDIG entered into a separate agreement with another struggling mining firm to take control of certain miners. The lender has ventured into crypto mining due to the capitulation of several mining firms.