Bitmain, a cryptocurrency mining hardware manufacturer, and Core Scientific, a bankrupt cryptocurrency mining firm, have reached an agreement to expand mining operations through a combination of cash and equity.
In this arrangement, Bitmain will provide 27,000 Bitcoin (BTC) mining machines in exchange for $23 million in cash and $53.9 million worth of common stock in Core Scientific. Alongside the hardware acquisition, Bitmain and Core Scientific have also established a new hosting arrangement to support Bitmain's mining operations.
The deal was formalized in August when a court filing outlined Bitmain's proposal to supply mining hardware in exchange for cash and equity as part of Core Scientific's restructuring plan. Anchorage, BlockFi, and Mass Mutual Asset Finance are also part of this restructuring plan, with all except Anchorage opting for a combination of cash and stock to settle their claims.
The expansion and investment plan by Bitmain is expected to commence in the fourth quarter of 2023, pending approval by a judge. Upon approval, the acquired hardware could enhance Core Scientific's hashrate by 4.1 exahash. Additionally, the two cryptocurrency mining companies have agreed to collaborate on upgrading Bitmain's latest-generation mining rigs hosted at Core Scientific data centers to further enhance productivity.
Core Scientific filed for Chapter 11 bankruptcy in December 2022, attributing its decision to the financial crisis and declining Bitcoin prices. The company faced significant challenges shortly after, ultimately succumbing to market instability.
