Core Scientific files motion to sell over $6M in Bitmain coupons

Bitcoin bankrupt (BTC) mining company, Core Scientific, filed an emergency motion on Jan. 25, seeking to sell $6.6 million worth of Bitmain coupons, according to to court records.

According to the filing, some conditions applied to the coupons make them useless for Core Scientific's business. Specifically, the coupons “can only be used to pay for 30% of any new Bitmain S19 Miners order, and cannot be redeemed with Bitmain for cash.”

Vouchers are limited to S19 models, which provide a lower hash rate than recent Bitmain models. “The Debtors do not believe that using their liquidity to purchase new S19 Miners, even with the availability of Bitmain Vouchers, is the best use of the Debtors' cash,” the company stated.

Additionally, Bitmain's vouchers will expire between March and April 2023, when the company anticipates being out of its Chapter 11 bankruptcy reorganization. Core Scientific also noted that it would not acquire additional S19 miners under Chapter 11 or after.

Along with the motion, the company has been in discussions with Bitmain and two potential third parties interested in purchasing the coupons at a significant discount. In particular, the sale of $1.9 million worth of Bitmain coupons for $285,000 and the sale of $4.8 million worth of coupons for approximately $713,000 represent 15% of the face value of the coupons.

The sale would result in a total of nearly $1.0 million on Core Scientific's balance sheets. The company also noted:

"While the aggregate purchase price of approximately $1.0 million would represent a significant discount from the approximately $6.7 million face value of the Bitmain Vouchers, it would also represent significant value above what these Bitmain Vouchers are worth to Debtors and their assets: zero".

According to the filing, the crypto winter resulted in a flood of S19 Miners being offered for sale on the secondary market, driving prices down. "As such, recent S19 Miner coupon transactions on the coupon exchange have occurred at values ​​between 15% and 25% of the coupon's face value."

Among the largest cryptocurrency mining companies in the United States, Core Scientific filed for Chapter 11 bankruptcy on December 21, 2022, due to rising energy costs, declining revenue, and falling Bitcoin prices. The company recently obtained judicial approval to access a loan of $37.5 million of existing creditors in the midst of liquidity problems.