The restructuring — which is expected to improve Greenidge’s future liquidity and balance sheet — is based on a non-binding term sheet that was entered into on Dec. 19.
In exchange for a substantial number of its miners, transfer credits and coupons that have accrued to Greenidge under its non-fixed price purchase contracts with Bitmain Technologies.
According to the filing, the lender would acquire 2.8 EH/s per second of mining equipment that Greenidge would host. The deal would eliminate approximately $57 to $68 million of its debt.
Meanwhile, the BTC mining firm would retain ownership of 1.2 EH/s of the mining equipment. Greenidge will also transfer its acquired mining infrastructure that is awaiting deployment at potential mining sites within three months following the completion of the debt restructuring and hosting agreements.
CEO of Greenidge, Dave Anderson commented on the announcement:
“If we complete this debt restructuring, this would improve our future liquidity and would provide a significant step toward the improvement of our balance sheet. In addition, we believe that the contemplated terms of a concurrently executed hosting arrangement would allow us to continue participating in the future upside potential of bitcoin.”
Greenidge said it had a cash burn of $8 million per month in October and November 2022 and expects a similar cash burn for December –$5.5 million of this was used to pay NYDIG’s principal and interests.
The SEC filing highlighted that Greenidge’s financial condition was uncertain. Part of the filing reads:
“There remains uncertainty regarding Greenidge’s financial condition and substantial doubt about its ability to continue as a going concern.”
The miner revealed that it was looking to raise additional equity capital and could look to dispose of its assets.
To secure the remaining debt balance with NYDIG — which may have a balance of between $6 million to $17 million — Greenidge will provide additional collateral on its remaining mining-related assets, infrastructure assets, equity of its subsidiaries, and certain cash balances.
The loan agreement will include affirmative, negative, and financial covenants, as well as early amortization events and events of default. In the event of a default, NYDIG will have the right to foreclose or take other legal action against Greenidge and such collateral.
Concurrently with the debt restructuring, Greenidge and NYDIG will enter into a long-term hosting agreement, under which Greenidge will provide hosting services for up to 74 Megawatts (MW) of energy capacity, as well as an additional 39 MW upon satisfactory completion of the restructuring.
The hosting agreement will require NYDIG to pay a hosting fee that covers the cost of power and direct costs associated with the management of the mining facilities, as well as a profit-sharing arrangement of gross profits.
The filing also noted that the Greenidge board of directors was also considering the possibility of a voluntary bankruptcy filing.
Greenidge stock has declined by 99.21%. It is currently trading at $0.31 after an almost 15% drop on Dec. 20.
Several BTC miners have considerably struggled in the current bear market situation. The falling value of Bitcoin, alongside high energy cost, and the record level of mining difficulty, has placed them in a challenging situation.
One Bitcoin miner, Compute North, has filed for bankruptcy. Another miner Argo Blockchain accidentally revealed its plans to file for bankruptcy.