• Greenidge Generation, a bitcoin miner based in New York, has reached a restructuring agreement with their lender, NYDIG.
• The agreement involves NYDIG purchasing 2.8 exahash per second (EH/s) of Greenidge’s bitcoin miners, eliminating $57-$68 million of their debt.
• Greenidge is expected to have a cash burn rate of $8 million per month in October and November 2022, and a similar rate in December 2022.
Greenidge Generation, a bitcoin miner based in New York, recently announced a restructuring agreement with their lender, NYDIG. The agreement is aimed at reducing the miner’s debt load and will involve NYDIG purchasing 2.8 exahash per second (EH/s) of Greenidge’s bitcoin miners. This move will eliminate $57-$68 million of their debt, leaving Greenidge with approximately 1.8 EH/s of their own miners and requiring that the mining firm also pledge the rest of their unencumbered assets to secure the remainder of the loan.
Greenidge was in a tough financial position due to the amount of cash they were burning each month, projecting that they would run out of money by March 2023 if they kept up the current rate. The main reason for this is that bitcoin miners have been hit hard with old bull market orders getting fulfilled and new contributions to increasing hash rate, all while the price of bitcoin held by the miners plummets. This caused miners to mine high and sell low, leading to a difficult situation for Greenidge.
The released term sheet indicated that the company’s average monthly cash burn rate during October and November 2022 was approximately $8 million, of which approximately $5.5 million per month was associated with principal and interest payments to NYDIG. It is expected that the company will have a similar cash burn rate and payments to NYDIG during December 2022.
The restructuring agreement with NYDIG is a step in the right direction for Greenidge and should help the company to reduce their debt and become more financially stable in the long term. As the agreement is finalized and goes into effect, the company will be able to move forward with a more secure financial position and be better equipped to handle the volatility of the cryptocurrency market.