Bitcoin miner Core Scientific and energy negotiator Priority Power Management have reached a $20 million settlement, which was approved by the judge in Core Scientific's bankruptcy proceedings. According to a filing made in the United States Bankruptcy Court for the Southern District of Texas on March 20, Judge David Jones signed off on allowing Core Scientific to transfer around $20.8 million worth of equipment to Priority Power.
The dispute arose from two Texas-based mining facilities that were scheduled 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 the company brought on Priority Power in June 2021 to exclusively manage, consult and develop infrastructure to fulfill 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."
The judge's decision means that Priority Power will receive $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.
Finally, Priority Power Management will retain the $514,000 it earned by curtailing power for Core Scientific. Core Scientific will also pay back Priority Power for legal fees and expenses up to $85,000.
The problems keep piling
The settlement comes as Core Scientific faces pressure from falling company revenues, low Bitcoin prices, and litigation costs against bankrupt crypto lender Celsius. The firm previously reached 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.
The settlement with Priority Power will have come as a blow to the already bankrupt Core Scientific as it continues to face ongoing legal and financial challenges.
Could it ever restructure or is this the last chapter before it passes over into the history books?