As part of a new supply contract, Bitcoin mining rig maker Bitmain will be investing heavily in the Texas-based Bitcoin miner Core Scientific.
Equity and Cash Investment
In a strategic move to bolster its position in the North American digital asset mining industry, Bitcoin mining rig manufacturer Bitmain, has announced a substantial investment of $53.9 million in Core Scientific, a Bitcoin-mining firm based in Texas, that filed for Chapter 11 bankruptcy in December 2022.
The two companies have devised an arrangement that encompasses a combination of equity and cash infusion. This financial commitment aims to facilitate the acquisition of advanced and more energy-efficient bitcoin mining equipment. Additionally, Bitmain has inked a fresh hosting agreement with Core Scientific to support its mining operations.
Supply Agreement Details
Under the purchase agreement, Bitmain will supply Core Scientific with 27,000 Bitmain S19J XP 151 TH bitcoin mining servers. This transaction involves a payment of $23.1 million in cash and $53.9 million in Core Scientific common stock. The per-share value of the stock will be determined in accordance with a bankruptcy court-approved chapter 11 plan of reorganization, with approval expected during the fourth quarter of this year.
Bitmain CEO Max Hua expressed optimism about the collaboration, stating,
"We look forward to deepening our strategic relationship with Core Scientific, our long-standing U.S.-based partner. Their professionalism, integrity, and commitment to the success of their hosting customers and to the growth of the Bitcoin Network is unsurpassed in the industry."
Strengthening Industry Professionalism
Core Scientific has been a long-time partner of Bitmain, operating more than 600,000 Bitmain miners in its data centers since its establishment in 2017. Currently, 99% of the over 200,000 miners in operation, both owned by Core Scientific and hosted for customers, are Bitmain S19 models. Bitmain has also entrusted Core Scientific with the operation and maintenance of a significant portion of its miners.
CEO of Core Scientific, Adam Sullivan, expressed his gratitude for the expanded partnership with Bitmain, saying,
"Together, we have worked tirelessly to professionalize our industry, charting a path for the long-term growth of the Bitcoin Network as bitcoin adoption increases around the world."
Enhanced Mining Efficiency
The newly secured miners are expected to enhance Core Scientific's mining fleet's efficiency, preparing it for future events like next year's halving. The Company anticipates receiving and activating the 27,000 units in the fourth quarter of 2023, potentially enhancing adding its self-mining hash rate.
Core Scientific's self-mining operations has surpassed BTC generation by all other listed miners in North America. This collaboration between the two holds the potential to significantly impact the North American Bitcoin mining landscape, driving innovation and growth in the industry.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
