Greenidge warned of bankruptcy while negotiating NYDIG debt overhaul

Greenidge Generation Holdings disclosed on December 20, 2022 that it had entered a non-binding term sheet with NYDIG to restructure approximately $74 million of secured debt, while warning that its cash burn was unsustainable and that its board had discussed a voluntary bankruptcy filing.

The term sheet was signed on December 19 and made public through Greenidge’s December 20 regulatory filing. That distinction matters: the event was a disclosure of proposed terms and acute liquidity risk, not a completed restructuring. The filing said definitive documents still had to be negotiated, third-party consents obtained and closing conditions satisfied.

Miners would move to the lender

Under the proposal, NYDIG would acquire bitcoin-mining machines representing approximately 2.8 exahashes per second of capacity. Greenidge would also transfer Bitmain credits and coupons and, subject to a post-closing condition, mining infrastructure awaiting deployment. In exchange, NYDIG would reduce Greenidge’s debt by approximately $57 million to $68 million.

Greenidge expected the remaining NYDIG balance to fall between $6 million and $17 million, depending on the assets transferred and completion of the post-closing condition. The company would pledge substantially all unencumbered assets as collateral for that balance and retain company-owned miners representing approximately 1.2 exahashes per second.

The two companies also contemplated a long-term hosting agreement. Greenidge would provide up to 74 megawatts of energy capacity, potentially increasing by approximately 39 megawatts if the condition was met. NYDIG’s hosting fee was intended to cover power and direct facility-management costs, with Greenidge also receiving a share of gross profits.

The filing showed a near-term cash problem

Greenidge reported approximately $22.0 million of cash, cash equivalents and restricted cash on November 30, down from $38.5 million on September 30. Its average cash burn during October and November was approximately $8 million per month, including about $5.5 million per month of principal and interest payments to NYDIG. The company expected a similar burn rate in December, while cautioning that timing made future requirements difficult to estimate.

Without additional liquidity, Greenidge said it risked lacking enough cash to support operations within two months. Even if the NYDIG transaction closed on the contemplated terms, management estimated that at least approximately $20 million of additional liquidity would be required to remain viable through 2023. As of November 30, Greenidge reported approximately $162 million of aggregate principal debt, so renegotiating NYDIG’s claim would address only part of the balance sheet.

The warning followed weak operating results. For the three months ended September 30, Greenidge reported $29.4 million of revenue and a $23.1 million net loss. Cryptocurrency-datacenter revenue was $18.3 million, 41% below the same quarter of 2021. Those company-reported results describe quarterly performance; they are not a market-price measurement.

A proposed change in the mining model

Greenidge said approximately 83% of revenue excluding Support.com for the nine months ended September 30 came from mining bitcoin. If the proposed arrangements closed, the company estimated that hosting would generate 60% to 75% of its likely revenue over the following two years, assuming power-and-capacity revenue comparable with earlier periods.

That would shift much of Greenidge’s exposure from owning mining output to operating infrastructure for a creditor’s machines. Hosting could replace direct bitcoin production with contracted fees and profit sharing, but the filing warned that even a significant near-term increase in bitcoin’s price might no longer produce a corresponding benefit for Greenidge. The revenue forecast was management’s scenario, not a verified outcome.

What remained unresolved on December 20

The public record established a severe liquidity warning and the outline of a debt-for-equipment transaction. It did not establish that NYDIG had purchased the miners, that debt had been extinguished, that bankruptcy was inevitable or that Greenidge had secured the additional capital it said it needed.

The event-day conclusion was therefore narrower: one publicly traded bitcoin miner was prepared to surrender most of the mining capacity covered by the proposal and pivot toward hosting to reduce secured debt, yet still told investors its continued viability was in substantial doubt.