Some Conditions applied to the coupons make them useless for Core Scientific’s business, a court filing shows.
Core Scientific filed for Bankruptcy. According to court records, there is a crisis motion seeking to sell Bitmain coupons.
The coupons are useless for Core Scientific’s business according to the filing. Specifically, the coupons can “simply be used to pay 30% of any new request of S19 Miners from Bitmain, and can’t be exchanged with Bitmain for cash.”
The coupons are limited to S19 models, which provides a lower hash rate yield compared to Bitmain’s recent models. “The Debtors don’t trust that using their liquidity to purchase new S19 Miners, even with the accessibility of the Bitmain Coupons, is the best use of the Debtors’ cash,” claimed the company.
Besides, the Bitmain coupons are expected to lapse among Spring and April of 2023, when the company anticipates having risen up out of its Part 11 reorganization. Core Scientific also noted that it will not acquire extra S19 miners while under Section 11 or thereafter.
Alongside the motion, the company has been in conversations with Bitmain and two potential outsiders interested in buying the coupons under a significant discount. In particular, the offer of a $1.9 million of Bitmain coupons for $285,000 and the offer of $4.8 million in coupons for approximately $713,000, both representing 15% of the coupons’ presumptive worth.
The sale would result in aggregate almost $1.0 million to Core Scientific’s balance sheets. The company also noted:
“While the aggregate purchase price of approximately $1.0 million would represent a significant discount to the approximately $6.7 million assumed worth of the Bitmain Coupons, it would also represent significant value above what these Bitmain Coupons are worth to the Debtors and their estates: zero.”
According to the filing, the crypto winter resulted in a surge of S19 Miners being offered for sale on the secondary market, driving prices down. “As such, recent transactions for S19 Miner coupons on the Coupon Exchange have happened at values of somewhere in the range of 15% and 25% of the coupon’s presumptive worth.”
Among the biggest cryptocurrency mining companies in the United States, Core Scientific filed for Chapter 11 bankruptcy on Dec. 21 because of rising energy costs, declining revenues, as well as the rut in Bitcoin prices. The company recently obtained court approval to access a $37.5 million loan from existing creditors in the midst of liquidity issues.
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