Core Scientific to transfer $20M of equipment to settle bankruptcy dispute
Millions of dollars worth of electrical equipment will be transferred to the crypto miners’ exclusive energy negotiator to settle a payments dispute.
A $20 million settlement between Bitcoin (BTC) miner Core Scientific and its energy negotiator Priority Power Management has been approved by the judge in Core Scientific’s bankruptcy proceedings.
In a March 20 filing in the United States Bankruptcy Court for the Southern District of Texas, Judge David Jones signed off on allowing Core Scientific to transfer around $20.8 million worth of equipment to Priority Power.
The companies had been in a dispute over two Texas-based mining facilities that were slated to receive 1,000 megawatts of power between them to increase Core Scientific’s mining capacity.
In a declaration filed on March 19, Core Scientific executive Michael Bros said it brought on Priority Power in June 2021 to exclusively manage, consult and develop infrastructure to fulfil its energy needs “on a short ramp-up schedule.”
However, Bros said that by May 2022, “it became clear that the Facilities would not receive the anticipated power load,” and Core Scientific stopped making payments to Priority Power, which “suffered significant losses.”
Priority Power then claimed Core Scientific owed it around $30 million for the work it had performed before the miner filed for Chapter 11 bankruptcy in December last year.
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The judge’s decision means that Priority Power will be given $20.8 million worth of equipment from the now-bankrupt firm, including electrical equipment such as power transformers and breakers.
The deal also promises that Core Scientific “will introduce” Priority Power “to any acquirer” of its sites in Texas, so that it can potentially go into an energy management and consulting agreement with the new owners.
Priority Power will also get to keep $514,000 earned by curtailing power for Core Scientific. The miner will also reimburse the firm “for legal fees and out-of-pocket expenses up to $85,000.”
Core Scientific filed for bankruptcy due to pressure from falling company revenues, low Bitcoin prices and litigation costs against the bankrupt crypto lender Celsius.
Core Scientific has been forced to hand over equipment before, making made a deal in February with New York Digital Investment Group to pay off a $38.6 million debt by handing over more than 27,000 mining rigs that were used as collateral.