Celsius is looking to raise $14.4 million by selling Bitcoin Mining vouchers and credits
by James · February 10, 2023
In another attempt to raise funds to repay creditors, now-bankrupt crypto lender Celsius is now looking to sell $14.4 million in vouchers and credits for Bitcoin mining company Bitmain.
The proposed deal, filed in the US Bankruptcy Court for the Southern District of New York on Thursday, includes $7.4 million in coupons that give holders a 10%-30% discount on future purchases of Bitmain’s mining rigs.
According to Celsius interim CEO Christopher Ferraro’s statement, the Bitmain coupons expire six months after purchase and are worthless after that, with value on the secondary market falling “significantly” as they approach their expiration dates. “Even if the estimated discount is significant, it would be a mistake to hold onto the Bitmain coupons in hopes of realizing more value in a sale at a later date. The alternative to selling the Bitmain coupons is that they expire worthless,” Ferraro said .
Celsius sells another $7 million in Bitmain credits.
When companies order a large number of mining machines, they are delivered in batches and paid for in installments. However, as energy prices and Bitcoin can fluctuate in value during an order’s fulfillment, it can sometimes happen that the value of the order has fallen below what the firm paid. To make up that difference, Bitmain issues credits.
Unlike vouchers, credits do not expire and can be redeemed for 100% of face value in cash from Bitmain two years after the last delivery date of the purchased mining rigs.
Until recently, the Bitmain credits were transferable; However, Ferraro stressed that the Chinese company updated its terms of use at the beginning of the year, which limited the ability to transfer the credits.
“Immediate monetization of the Bitmain credits is for the benefit of the debtors’ estates and their creditors,” Ferraro said, adding that Celsius expects to realize up to 88% of the face value of the credits in the company.
He added that “the sale of the Bitmain credits provides the debtors with a golden opportunity to realize value on an illiquid and risky asset.”
Celsius is struggling to raise money
The latest proposal to raise money comes amid concerns about the bankruptcy process’s hefty cash burn.
The Celsius committee of unsecured creditors objected earlier this week to the lender’s proposal to further extend the deadline for the restructuring plan. The committee argued that “if the debtors follow their current schedule, they simply cannot emerge from bankruptcy by that time.”
In addition, William Harrington – a US Department of Justice trustee tasked with overseeing administrative processes in the case – said the speed with which lawyers are “consuming” Celsius’ assets is a reason to reject the extended timeline, despite the crypto lender’s claims that many creditors will have to weigh in on the plan proposal.
The bankruptcy court had previously ruled that Celsius could sell $18 million worth of stablecoins in Earn accounts to fund administrative expenses.
