In order to pay back a $38.6 million loan, insolvent cryptocurrency miner Core Scientific would transfer ownership of 27,403 mining machines to cryptocurrency lender NYDIG, 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 is greater than the collateral held by ASIC.”
Core Scientific Explains Decision
The agreement was justified by Core Scientific by claiming that the machines were older models with lower hash rates than more recent 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.
It also mentioned that some currently idle Bitcoin (BTC) mining equipment could be installed in its storage to lessen this loss. It added that its machine, “S19 XP,” is more efficient than the ones it lets go of.
It also mentioned that it wanted to sell some mining facilities as another justification for giving up its ownership of the machines. The bankrupt company claimed that by selling the older equipment, they would have enough rack space to house the most recent miner models.
The final reason it gave for its decision was that the value of the ASIC miners has “dropped considerably.” The firm claims that it could buy the same kinds of equipment for $25 million, which is a lot less than the amount of debt NYDIG is eliminating.
Recently, NYDIG and another struggling mining company reached a separate agreement to take control of some miners. Due to the collapse of several mining companies, the lender has started mining cryptocurrencies.