Bitmain and Anchorage Expected to Take Stakes in Bitcoin Miner Core Scientific as Part of the Bankruptcy Plan
The company’s amended restructuring plan is subject to a vote by creditors, while many of the settlements outlined are subject to court approval, according to court documents filed Tuesday.
According to documents filed with bankruptcy court, Core Scientific will buy 27,000 units of Bitmain Antminer S19j XPs, the manufacturer’s most powerful air-cooled model, for $77.1 million. The purchase will be funded by $23 million in cash and $54 million in company equity once the plan becomes effective. The transaction reduces Core Scientific’s need for new cash by $30 million as the machines are paid for in part with equity.
This is likely Bitmain’s first investment in a listed miner.
Companies that have loaned Core Scientific funds to purchase equipment may find themselves choose to either fully convert their claims into equity or assume secured debt of the resulting entity for 80% of the value of their claims. According to the document, only Anchorage Digital, which had a $29 million loan at the time of the bankruptcy, is expected to choose the equity option.
Mass Mutual Asset Finance, Barings, BlockFi, 36th Street Capital Partners and Trinity Capital, which collectively held approximately $193 million in loans to Core Scientific at the time of the petition, are expected to opt for secured debt.
The Company is also negotiating a $55 million rights offering to current holders of common stock.
Investment bank B. Riley, which has loaned Core Scientific $70 million to fund bankruptcy costs, will convert the outstanding balance of this loan into a deferred loan and provide an additional $25 million of new financing.
If secured bondholders vote to accept the plan, they can either receive new secured debt equal to 75% of the value of their claims or equity. If they do not vote to accept the plan, they will receive their pro-rata share of the secured debentures issued by the reorganized company.
In addition, Core Scientific is negotiating a settlement with lender Foundry to fully recover Foundry’s claim and is awaiting court approval of a series of settlements involving equipment and service providers.
Core Scientific is the world’s largest publicly traded miner in terms of total hash rate, although Marathon Digital Holdings (MARA) is catching up fast. The company filed for bankruptcy in December 2022, at a time when most of the industry was struggling to keep operations amid high energy prices and a falling bitcoin price.
