Bitmain’s Expansion Deal with Core Scientific

Bitmain, a manufacturer of cryptocurrency mining hardware, and Core Scientific, a defunct cryptocurrency mining company, have committed to a combination of equity and cash to finalize the expansion of mining facilities.

Bitmain will provide 27,000 Bitcoin mining machines in exchange for $23 million in cash and $53.9 million in common stock of the insolvent firm, per the agreement between the two mining companies.

In addition to the mining hardware procurement agreement, Bitmain and Core Scientific have entered into a hosting agreement to support Bitmain’s mining operations.

As part of Core Scientific’s restructuring plan, Bitmain’s intention to sell mining hardware in exchange for cash and equity was disclosed in a court filing in August. In addition to Bitmain, the plan included Anchorage, BlockFi, and Mass Mutual Asset Finance.

Except for Anchorage, the other three companies settled their claims using a combination of cash and equity. Bitmain’s expansion and investment plan will go into effect in the fourth quarter of 2023, pending judicial sanction.

Once approved, the hardware could potentially increase Core Scientific’s hash rate by 4,1 exahashes.

The two crypto mining companies have also agreed to collaborate on the upgrade of Bitmain’s previous-generation miners hosted at Core Scientific’s data centers in order to boost the latter’s productivity.

In December 2022, Core Scientific filed for Chapter 11 bankruptcy, citing the financial crisis and the falling price of Bitcoin as the primary reasons for its decision.

The company began experiencing difficulties in the weeks leading up to its eventual demise due to market turmoil.