Bitmain, a prominent cryptocurrency mining hardware manufacturer, and Core Scientific, a bankrupt crypto mining firm, have reached an agreement to expand their mining facilities through a combination of equity and cash. This partnership aims to bolster the operations of both companies in the highly competitive crypto mining industry.
Under the deal, Bitmain will supply 27,000 Bitcoin (BTC) mining rigs to Core Scientific for a total of $23 million in cash. Additionally, Bitmain will provide $53.9 million worth of common stock of the bankrupt firm. This strategic collaboration will not only facilitate Core Scientific’s restructuring plan but also solidify its position in the market.
The agreement was reached in August, and it adheres to the court filing that highlighted Bitmain’s intention to sell mining hardware in exchange for cash and equity as part of Core Scientific’s restructuring plan. Other firms involved in this plan include Anchorage, BlockFi, and Mass Mutual Asset Finance, all of which opted for a combination of cash and equity settlements to resolve their claims.
To implement this expansion plan, Bitmain’s investment is set to be launched by the fourth quarter of 2023, pending approval from a judge. Once approved, Core Scientific’s hash rate is expected to increase by 4.1 exahashes, substantially enhancing its mining capabilities. The collaboration will also involve upgrading Bitmain’s last-generation miners hosted at Core Scientific’s data centers, consequently boosting the firm’s overall productivity.
Core Scientific faced financial challenges that led to its filing for Chapter 11 bankruptcy in December 2022. The company attributed its decision to the financial crisis and the declining price of Bitcoin. As market conditions worsened, Core Scientific experienced significant difficulties, eventually leading to its collapse.
This collaboration between Bitmain and Core Scientific holds significant promise for both parties. For Bitmain, it presents an opportunity to expand its customer base and enhance its reputation as a leading mining hardware provider. Core Scientific stands to gain from Bitmain’s expertise and support, enabling it to recover from bankruptcy and reestablish itself as a prominent player in the crypto mining industry.
Overall, this collaboration signifies the ongoing growth and consolidation within the cryptocurrency mining sector. As the industry becomes increasingly competitive and complex, partnerships like this one allow companies to pool their resources and expertise, leading to greater efficiency and profitability. With the approval of the judge pending, Bitmain and Core Scientific’s strategic alliance is poised to reshape the landscape of crypto mining.