Bitcoin miner Greenidge Generation restructures debt to escape bankruptcy

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Key takeaways:

  • Greenidge still owns roughly 10,000 miners, keeping a capacity of 1.1 EH/s despite reorganizing it into a hosting company for Bitcoin mining.
  • A share sale and some more time for repayments are part of the agreement with investment bank B. Riley.

The debt that Greenidge Generation Holdings, a bitcoin mining company, owes New York Digital Investment Group (NYDIG) has been drastically decreased.

On January 30 Greenidge and NYDIG engaged in several agreements related to their secured debt, under which Greenidge gave NYDIG ownership of certain credits and Bitcoin mining equipment. The transaction resulted in a total aggregate debt reduction of about $59 million by lowering the loan’s principal and accrued interest balance with NYDIG from about $76 million to about $17 million.

The senior secured loan agreement provides a way for a loan to be voluntarily prepaid by transferring ownership of specific mining infrastructure assets. In addition, the financing deal may reduce the principal balance of the debt to around $7 million, subject to a definitive agreement with NYDIG. In mid-December 2022, Greenidge inked the agreement to lower its NYDIG debt by $57 million and $68 million. Dave Anderson, CEO of Greenidge, stated:

“The debt restructuring we’ve announced today significantly improves our balance sheet and provides us with a clear path forward as we enter 2023, ” 

Greenidge continues to possess roughly 10,000 miners, retaining a capacity of 1.1 exahashes per second (EH/s), the company says, while turning the business into a hosting company for Bitcoin mining rigs.

According to the new restructuring agreement, Greenidge will raise $1 million in a stock offering underwritten by B. Riley. The note will receive a $1.9 million principal payment from the miner in June, lowering the outstanding sum to around $9 million.

Additionally, Greenidge is actively trying to sell any extra real estate from its mining facility in South Carolina. Any money earned would be applied to the note. The monthly payments would be reduced from the planned $1.5 million to $400,000 if the miner can pay down $6 million or more by the end of June.

Many mining companies have used the same tactics to reduce debt amid a harsh bitcoin winter. By selling its flagship Helios mining plant and obtaining a $35 million loan from Mike Novogratz’s cryptocurrency investment company Galaxy Digital in late December 2022, Argo Blockchain was able to reduce its overall debt by $41 million.

Greenidge also disclosed its early financial figures for the fourth quarter of 2022, which showed $15 million in revenues and losses of up to $130 million. In addition to the debt reduction. During Q4 2022, the company generated about 683 BTC ($15.7 million).

Argo Blockchain (ARBK), which received a $100 million lifeline from Galaxy Digital and the now-bankrupt Core Scientific, was in a scenario comparable to Greenidge’s when it issued a warning about its deteriorating liquidity position as early as September.

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