Bitcoin miner Stronghold returns 26,200 mining rigs to NYDIG in order to clear a $67 million debt it has to the company.
Stronghold Digital Mining (SDIG), a publicly traded Bitcoin mining company, announced that it intends to return more than 26,000 mining rigs to New York Digital Investment Group (NYDIG) in order to considerably reduce its debt. NYDIG, one of the biggest bitcoin businesses, helps miners finance their equipment and power infrastructure.
The mining corporation also aims to restructure a convertible note for cash after acquiring a legally binding commitment letter from private credit investment manager WhiteHawk Capital to alter its financing terms.
Bitcoin Miner Stronghold Returns Rigs To Pay Debt
In a press statement on Tuesday, Stronghold said that it will return approximately 26,200 pieces of bitcoin mining equipment to NYDIG in order to settle the total $67.4 million debt owing to the lender.
The bitcoin miner released its Q2 financial report this week after a seven-day delay. The company stated that the talks were to blame for the delay. According to the financial report, Stronghold owes $127.9 million at the end of the second quarter. As a result, the deal with NYDIG decreases the company’s debt by more than half.
In the press statement, the mining business stated that it would collaborate with WhiteHawk to expand and restructure its present finance arrangements into a 36-month note.
Stronghold will get $20 million in additional borrowing capacity as well as a reduction in the short-term principal payments as a result of the deal, which it plans to use to opportunistically purchase new mining equipment.
Stronghold noted that in exchange for a reduction in the outstanding principal amount of $11.3 million, it changed its convertible notes and warrants by lowering the strike price on existing warrants from $2.50 to $0.01.
“By returning miners to NYDIG that served as the collateral for the non-recourse financing agreements and restructuring the WhiteHawk financing agreements and the Convertible Notes, we will be able to eliminate over half of our total principal amount of debt outstanding and the significant associated interest and principal payments,” the company said.
Bitcoin Miner Struggle
Since the market collapse in Q2, bitcoin miners have sold their mining equipment or extracted bitcoins to pay off debt or to meet operating expenses. For instance, when the price of bitcoin fell below $30,000 in May, miners sold all of their output.
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