Core Scientific to Send $20M Worth of Mining Equipment to Settle Payment Dispute

The United States Bankruptcy Court for the Southern District of Texas ordered Core Scientific to transfer approximately $20.8 million worth of mining equipment to the energy infrastructure firm – Priority Power. 

The entities had a dispute over two mining facilities located in Texas that were supposed to supply Core Scientific with 1,000 megawatts of electricity. 

The Judge’s Decision

The judge involved in Core Scientific’s bankruptcy case – David Jones – ordered the company to transfer more than $20 million of electrical equipment to Priority Power Management (PPM) and thus settle the quarrel between the two.

“All of the Debtors’ interest, if any, in the equipment described in Annex A to this Order shall be transferred to PPM, on a “free and clear” basis pursuant to section 363(f) of the Bankruptcy Code. 

With respect to the portion of such equipment noted on Annex A to the Term Sheet as having been delivered and either installed or staged at the Cottonwood Facility or the Cedarvale Facility, PPM shall have the right, at PPM’s sole cost and expense, to retrieve such equipment without further order of this Court,” the statement reads.

The energy negotiator previously maintained that Core Scientific owed it around $30 million for the provided services prior to the bankruptcy filing. 

The cryptocurrency miner hired Priority Power as its “exclusive energy manager and consultant” in the summer of 2021. Apart from dealing with electricity contracts, the firm was supposedly obliged to build two mining facilities in Western Texas.

Core Scientific executive Michael Bros said his company stopped paying Priority Power after realizing the sites would be left without the necessary energy load. 

It is worth noting that the miner ceased other debt payments towards the end of 2022, harmed by the crypto winter and the decreasing prices of digital assets, particularly bitcoin. It sold most of its BTC holdings in the past several months and filed for Chapter 11 bankruptcy protection a few days before Christmas. 

The Latest Forays

Despite going bankrupt, Core Scientific vowed to keep mining bitcoin to repay debtholders. It produced 1,435 BTC in December and boosted its self-mining hashrate from 15.4 EH/s to 15.7 EH/s.

The firm tried to fix some of its issues by securing a $500 million fundraiser at the end of January. Multiple giants in the financial field, including BlackRock, Apollo Capital Management, and Ibex Investors, led the financing.

Core Scientific transferred over 27,000 of its mining machines (18% of its total fleet) to New York Digital Investment Group (NYDIG) at the beginning of February to erase an outstanding debt of $38.6 million.