In a groundbreaking deal, the New York Digital Investment Group (NYDIG) and Core Scientific have agreed to a debt settlement of $38.6 million in which Core Scientific will hand over more than 27,000 cryptocurrency mining devices that were used as collateral.
According to Core Scientific, the Benefits of Paying Off Immediately Are Greater Than Short-Term Losses
In a document delivered to the court, Core Scientific proclaimed that their cryptocurrency mining rigs were no longer necessary for their operations and they planned to move forward. At this moment, they are awaiting official authorization from The United States Bankruptcy Court for the Southern District of Texas, which is currently overseeing all procedures with regard to this matter.
Even though Core Scientific acknowledged that it would suffer a short-term loss from paying off its debt, it insisted on taking action to reap the long-term rewards. This cryptocurrency mining company believes this decision is essential to becoming more lucrative and sustainable for years to come.
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Furthermore, the company is transitioning its operations to a fleet of slightly smaller but more proficient cryptocurrency mining rigs. These had been tucked away and were not actively generating Bitcoin (BTC). By deploying their S19 XP mining rigs that are currently dormant, they hope to reduce some losses incurred while migrating assets.
Core Scientific Announced Its Bankruptcy Last December
On December 21st, the cryptocurrency mining company Core Scientific submitted its Chapter 11 bankruptcy petition following months of struggling financially. According to their statement with the SEC, this was due to a rise in electricity costs, greater Bitcoin hash rate across the globe, poor Bitcoin rates, and Celsius’s collapse into bankruptcy. The ramifications were severe enough that they needed external help to resolve these issues and ultimately found it necessary to file for Chapter 11 protection.
On January 31, the bankruptcy court approved the cryptocurrency mining company’s resolution to switch its existing debt to a new loan worth $70 million. Consequently, investment bank B. Riley – one of Core Scientific’s creditors- can now supply the organization with financial assistance.
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