Core Scientific will hand over 27,000 rigs to pay $38 million in debt

Mining company Crypto Core Scientific struck a deal with New York Digital Investment Group (NYDIG) to pay off $38.6 million in debt by surrendering more than 27,000 mining machines used as collateral.

In court filings, the company said mining rigs are no longer critical to its operations and plans. The company is now awaiting approval from the United States Bankruptcy Court for the Southern District of Texas, which is in charge of the proceedings.

While the company accepts that the move will negatively impact its earnings, Core Scientific highlights that the long-term benefits of paying off its debts “outweigh the immediate costs”. Crypto mining companies believe that transfers are the first step to becoming more profitable and sustainable.

The company is also shifting its operations to what it describes as a “somewhat smaller, but more efficient” fleet of mining rigs that reside in storage rather than mining Bitcoin (BTC). The company plans to offset some of the losses incurred by the transfer of assets by installing an S19 XP mining rig, which is currently idle.

Related: Core Scientific filed a motion to sell over $6 million in Bitmain coupons

The crypto mining company filed for Chapter 11 bankruptcy on December 21. The filing comes months after the company disclosed that it was having financial difficulties filing with the Securities and Exchange Commission. At the time, the company cited rising electricity costs, increasing global Bitcoin hash rates, low Bitcoin prices, and Celsius’ bankruptcy as reasons for its financial difficulties.

On January 31, a bankruptcy court approved the mining company’s plan to borrow $70 million to replace existing loans. With this, Core Scientific can take out a loan from investment bank B. Riley which is also one of the company’s creditors.