Another Bitcoin Miner teetering on the brink of bankruptcy

(Bloomberg) — Greenidge Generation Holdings Inc., once one of the largest public Bitcoin miners in the US, warned it may seek bankruptcy protection as it enters debt restructuring talks with lender New York Digital Investment Group.

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The company, probably best known for a long-running dispute with environmentalists over the impact of its operations on New York’s Seneca Lake, is the latest miner to teeter on the brink of bankruptcy in the wake of the plunge in the value of the largest cryptocurrency.

Greenidge has entered into a “non-binding term list” to restructure approximately $74 million of debt with NYDIG, according to a filing with the U.S. Securities and Exchange Commission. Under the pact, the lender would purchase mining rigs from Greenidge and enter into a hosting agreement. In return, NYDIG would agree to reduce the debt from approximately $57 million to $68 million. If the deal goes through, it would effectively transform Greenidge from a mining company to a hosting company.

Bitcoin miners raised billions of dollars in debt financing to fund their rapid expansion in the last bull run. But low Bitcoin prices, rising energy costs and stiff competition have reduced profit margins and made it difficult for them to repay debt. Major Bitcoin miners like Core Scientific and Argo Blockchain have been warning of possible bankruptcy in recent months, largely because of their mounting debts to cryptocurrency lenders.

Greenidge’s average monthly cash burn rate over the past two months has been approximately $8 million. That is usually used to describe the rate at which a company spends capital to fund overheads before it generates a profit or loss from operations. Approximately $5.5 million of those costs related to principal and interest payments to NYDIG. The company expects to have a similar cash burn rate and similar payments to NYDIG, according to its December filing.

The Fairfield, Connecticut-based miner has a natural gas plant that powers its Bitcoin mining facility in Dresden, New York. It is one of the first and largest crypto mining companies in the state. While Greenidge’s current operations remain intact, New York Governor Kathy Hochul last month signed one of the most restrictive laws in the US on crypto mining with a two-year moratorium on new fossil fuel miners’ licenses.

Shares of Greenidge are down about 98% this year and are trading at about 33 cents. Bitcoin is down about 63% over the same period.

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