BTC mining

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.

Core Scientific’s facility in Marble, North Carolina. Source: Core Scientific

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.

Related: Crypto mining in 2023 — Is it still worth it?

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.

Jack Dorsey’s Block asks for input on proposed ‘mining development kit’

Block’s mining hardware product lead, Naoise Irwin, has asked for pointers on a proposed hardware and software development kit for Bitcoin mining.

Payments company Block, formerly known as Square, is delving deeper into the crypto mining industry with potential plans to build a “mining development kit.”

A March 7 blog post revealed that the Jack Dorsey-founded multinational technology firm was mulling its latest vision for advancing its Bitcoin (BTC) mining ambitions. Senior product lead for mining hardware Naoise Irwin asked for feedback on the concept via email.

The mining development kit (MDK), if it goes ahead, will provide a “suite of tools” to developers with the aim of increasing the “accessibility and openness” of Bitcoin mining.

Block noted the kit would deliver several components including an “industrial-grade Bitcoin mining hashboard” designed to be compatible with the firm’s custom-built control board and third-party controllers such as Raspberry Pi.

Additionally, there will be a custom-designed controller board designed to work with the “hashboard.”

The firm asked what features users want to see on the proposed hardware such as power requirements, required connections, and how much it should cost.

There will also be open-source firmware, a software API and a web front-end, “allowing developers to modify the key performance parameters of the hashboard,” it stated.

Block asked for additional feedback on the software, reference material and support documentation.

“The intention behind the MDK is to provide developers with a suite of tools to help unlock creativity and innovation in Bitcoin mining hardware.”

The plan replicates the Bitcoin Developer Kit and Lightning Developer Kit projects developed by Block subsidy Spiral.

Related: Block remains on the hunt for wallet partners nearly two years later

In October 2021, Dorsey announced plans for an open-source Bitcoin mining system for businesses and individuals. Those plans were confirmed in January 2022 and development commenced.

Irwin stated that since then, “we have been heads down building a team to explore our mining hardware strategy, and have kicked off the long process of developing our own Bitcoin mining semiconductor chips (ASICs).”

He ended the blog post by stating further updates on the mining hardware program will be coming in the following weeks and months.

Iris Energy to nearly triple hash rate with estimated 44,000 new BTC miners

With the tough conditions that faced Bitcoin miners last year, Iris’ co-founder said the purchase was a “significant milestone” for the company.

Australia-based Bitcoin (BTC) mining company Iris Energy has revealed it will nearly triple its mining capacity with the addition of thousands of mining rigs.

On Feb. 13 the firm said it purchased an additional 4.4 exahashes per second (EH/s) worth of Bitmain Antminer S19j Pro ASIC miners, bringing its self-mining capacity to 5.5 EH/s from 2.0 EH/s.

Based on the S19j Pro’s maximum hash rate of 100 terahashes per second (TH/s), the purchase adds an estimated 44,000 miners to its fleet, according to Cointelegraph’s calculations.

Daniel Roberts, Iris’ co-founder and co-CEO, said the purchase “is a significant milestone” for the company, adding it has been a “challenging period for both the industry and markets more generally.”

Iris said the new miners will be installed in the company’s centers but did not mention in which locations. The firm operates three facilities in various locations in British Columbia, Canada and one in Texas in the United States.

Iris’ flagship site in Mackenzie, British Columbia. Source: Iris Energy

The company used $67 million of remaining prepayments to ASIC miner manufacturer Bitmain to fund the purchase of the rigs “without any additional cash outlay.”

Iris had a 10 EH/s contract with Bitmain which it says “have been fully resolved, with no remaining commitments.” It stated it remains debt free.

The firm said it’s also considering options to sell surplus miners above its 5.5 EH/s of mining capacity to re-invest the funds.

Related: Core Scientific to hand over 27K rigs to pay $38M debt

Last November the company was forced to unplug miners used as collateral on a $107.8 million loan, as the units were producing “insufficient cash flow to service their respective debt financing obligations.”

Over the past few months, cryptocurrency miners have been squeezed from multiple directions, having to confront low Bitcoin prices amid high hash rates, high mining difficulty and high energy prices.

The pressure caused publicly listed Bitcoin mining companies to sell off almost all of the BTC mined throughout 2022 with data from blockchain research firm Messari showing Iris sold around 100% of the nearly 2,500 BTC it mined that year.

 A February analysis from Hashrate Index shows that publicly listed miners increased their production in January with better weather and stable electricity prices helping the production surge. Iris’ January production resulted in 172 BTC, compared to 123 BTC in December.

Hut 8 merger would’ve happened even without FTX or crypto turmoil, says CEO

Falling crypto prices have forced many crypto miners to cut costs or consolidate in order to survive the crypto winter.

Crypto exchange FTX’s collapse and overall crypto market turmoil were not key factors in the decision to merge crypto mining firm Hut 8 with US Bitcoin Corp., according to Hut 8 CEO Jamie Leverton. 

On Feb. 8, Leverton said that the merger was mainly about providing diversified revenue and helping scale the combined businesses, stating:

“I think this deal would have happened regardless. The ability for us to bring these businesses together we think is so incredibly complementary.”

The all-stock merger was announced on Feb. 7, with the combined company — now called Hut 8 Corp. or “New Hut” — to be based primarily in the United States rather than Canada.

Regarding the collapse of FTXin November, Leverton said that fears were “starting to subside a little bit,” and interest was returning to the crypto industry.

She added, “I think we’re seeing a lot of interest come back into this space, we’ve seen significant appreciation across the space so far in 2023.”

Merging the two mining firms is “going to provide an incredible amount of scale,” she continued, adding that there will be “diversified revenue programs,” which is a good strategy for both companies independently.

New Hut will reportedly have access to around 825 megawatts across six facilities in New York, Texas, and Alberta province in Canada. Its total combined mining capacity will be 5.6 exahashes per second (EH/s).

Commenting on the choice of location, Leverton said that it was in the best interest of the business to have “diversified geographies,” adding:

“One of the advantages here is [that the merger is] giving us that geographic diversification. There’s uncertainty in regulatory environments on both sides of the border,”

Hut 8 has a mining facility in North Bay, Ontario, however operations have been suspended due to an ongoing court battle with its energy supplier.

US Bitcoin’s Niagara facility has issues of its own with an ongoing dispute with the City of Niagara Falls over complaints by residents regarding noise levels.

The firm provided more details on the merger in a presentation on Feb. 8. The transaction is expected to close in Q2, 2023, subject to shareholder, regulatory and stock exchange approvals.

Earlier this week, Leverton said that during the interim period, the firm plans to cover its operating costs through a combination of selling the Bitcoin it mines, and exploring various debt options.

Related: Bitcoin miner Hut 8 takes stoush with Ontario power supplier to court

Hut 8 stock slumped 8% on the day the merger was announced. Furthermore, according to MarketWatch, Hut shares had fallen 1.2% on the day to $2.12 in after-hours trading. The stock is currently trading 86% down from its November 2021 all-time high of $15.28.

Bitcoin miner Hut 8 takes stoush with Ontario power supplier to court

The lawsuit escalates a months-long dispute between the crypto miner and one of its energy suppliers in Canada.

Canada-based Bitcoin (BTC) miner Hut 8 Mining Corporation has ramped up its ongoing fight with its power supplier for one of its mining sites, filing a lawsuit in a Canadian court.

Hut 8 said on Jan. 26 that it had filed a Statement of Claim in the Superior Court of Justice of Ontario against Validus Power, an energy supplier for a Hut 8 mining facility in North Bay, Ontario.

The firms have been in an ongoing dispute since early November due to what Hut 8 alleges is a failure by Validus to “meet its contractual obligations” for the power purchase agreement.

In its new lawsuit, Hut 8 is seeking “monetary damages incurred as a result of the dispute” and enforcement of certain provisions as per the agreement signed by the two companies.

Hut 8 and Validus started working together in late 2021, with Validus initially providing 35 megawatts (MW) of power to North Bay, a figure that increased to around 100 MW by the end of 2021.

A June photo from the North Bay facility showing multiple ASIC crypto miners. Source: Hut 8

On Nov. 9, Hut 8 issued a notice of default to Validus, alleging it failed to achieve milestones by the dates outlined in the power purchase agreement and claiming that the firm demanded Hut 8 pay for energy at a higher price than the agreement called for.

An update from Hut 8 later that month revealed Validus suspended the delivery of energy to its North Bay site. Validus fired back with its own default notice alleging that Hut 8 failed to pay for its power charges, a claim Hut 8 denies.

To this date, operations at the site remain suspended. Hut 8 said it is exploring alternatives to mitigate the impact of the dispute, including through “organic and inorganic growth opportunities.”

Related: Bitcoin miners’ worst days may have passed, but a few key hurdles remain

Before it was taken offline, the North Bay site had 8,800 crypto mining rigs and a hash rate capacity of 0.84 exahashes per second (EH/s), accounting for over one-fourth of its total production capacity, according to a December investor deck.

Cointelegraph contacted Validus and Hut 8 for comment but did not receive an immediate response from either firm.

Bitcoin mining difficulty set for 8-month record gains despite BTC price dip

Bitcoin network fundamentals seem not to care about spot price weakness, with both difficulty and hash rate making an impressive recovery.

Bitcoin (BTC) may have hit six-week lows of under $20,000 but its network fundamentals are anything but bearish.

The latest on-chain data shows that, far from capitulating, hash rate and difficulty are making snap gains.

Data supports “doozy” difficulty jump

Despite being down around 7% in a week, BTC/USD is not putting off miners, who have recently exited their own multi-month capitulation phase.

Now, with hardware and competition returning to the network, fundamental indicators are firmly in “up only” mode as August draws to a close.

This is neatly captured by difficulty — an expression of, among other things, the scale of competition among miners for block subsidies — which is due to increase by an estimated 6.8% next week.

According to data from on-chain monitoring resource BTC.com, this will be the highest upward difficulty adjustment since January this year.

Not only that, but should the 6.8% increase materialize, difficulty will jump to new all-time highs.

“We may see a difficulty jump doozy enough to set a new (or close to new) ATH in a few days,” Bitcoin mining consultancy firm Blocksbridge forecasted in the latest edition of its regular newsletter, “Miner Weekly,” released on Aug. 27.

Blocksbridge nonetheless noted that the current climate was not easy for all network participants. Those with older equipment, for example, were feeling the squeeze thanks to spot price losses and equivalent drop in the value of block subsidies and fees versus costs such as electricity.

“Long story short is that the bear market is really crashing those with inefficient mining fleets,” it continued.

Bitcoin mining overview (screenshot). Source: BTC.com

Hash rate rebounds to target all-time high

Back to more bullish numbers and Bitcoin’s hash rate looks to be copying difficulty in a fresh push for new record highs.

Related: Still growing — Armenian mining operator increases power plant capacity

According to estimated data from monitoring site MiningPoolStats, the hash rate stood at up to 246 exahashes per second (EH/s) as of Aug. 22, inches from all-time highs of 251 EH/s measured in late April.

Hash rate is always an estimate, and its value fluctuations do not imply direct increases or decreases in miner activity.

Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStats

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