Limestone Bitcoin miner at center of lawsuit secures more funding as prices plummet | WJHL

JOHNSON CITY, Tenn. (WJHL) – The financially strapped owner of a Limestone Bitcoin mine – which Washington County is suing – recently raised $2.25 million in debt financing as it seeks to successfully go public while keeping what is $60 million in debt. and navigating falling Bitcoin prices.

Whether GRIID Infrastructure’s financial challenges end up having a direct impact on how long it operates in Washington County is an open question, a local economist told News Channel 11 Thursday.

It is also an arguably important factor for county commissioners to consider when considering whether to settle the lawsuit against GRIID subsidiary Red Dog Technologies – a settlement that would see Red Dog close its Limestone mine but build a new one in Telford.

“If they meet their variable costs with what they earn from mining Bitcoin, their lender can be quite patient through the ‘crypto winter,'” Milligan University economist David Campbell told News Channel 11. Those variable costs will include the power purchased from BrightRidge, which leases land to Red Dog next to the Bailey Bridge Road substation, and other non-debt running costs.

Cryptocurrency prices fell sharply in the spring and continued to slide into the summer. A shake-up in the crypto markets this week has sent Bitcoin prices even lower, making the earnings of miners like GRIID much lower than a year ago.

“It comes down to whether they (lenders) believe they have a chance to recoup a larger portion of their investment later as opposed to calling in the loan soon,” Campbell said, explaining that accelerating the debt would likely bankrupt GRIID .

GRIID “issued promissory notes … in exchange for loans of $250,000 and $2,000,000,” respectively, on Sept. 2 and Sept. 15, according to a federal filing by Adit EdTech Acquisition Corp., the company hoping to take GRIID public.

The Nov. 4 filing relates to Adit EdTech’s efforts to extend the deadline that shareholders will allow GRIID to complete a merger and go public. An Oct. 19 filing revealed that GRIID’s main lender, Blockchain Access UK Ltd., closed a line of credit and converted GRIID’s debt into a $57 million term loan recently.

“The Company and other parties are working to secure additional sources of financing to provide additional liquidity to the surviving Company following the Merger (“New GRIID”),” notes the Securities and Exchange Commission.

GRIID noted in a November 2021 investor presentation that “at large scale” it would break even with Bitcoin prices as low as $6,200. But GRIID at large scale assumed a mining capacity of more than 1,000 megawatts. GRIID’s actual capacity at the time was 48 megawatts, with about half of that at the Limestone site.

GRIID, whose subsidiary Red Dog Technologies officially owns the Limestone mine, is also awaiting a decision Nov. 28 by the Washington County Commission on a proposed settlement in the county’s lawsuit the county filed against Red Dog in November 2021. The lawsuit sought closure of the noisy mine next time. to a BrightRidge substation in the New Salem community in exchange for financial concessions and construction of a new facility in the Washington County Industrial Park (WCIP).

Residents of Telford, where WCIP is based, quickly protested when the settlement was first mooted in June, despite language that placed some restrictions on noise. Bitcoin “miners” are actually banks of powerful computers that perform complex equations to “mine” new Bitcoin and verify the cryptocurrency’s transactions. They often emit high noise levels from fans used to cool the computer equipment – something that happens at the limestone mine and drew complaints from neighbors as of May 2021.

The county’s Commercial, Industrial and Agricultural Committee (CIA) recommended at its meeting on November 3 that the full 15-member commission reject the settlement proposal when it meets on November 28.

In effect, it would send the county, Red Dog and BrightRidge, the original defendants in the case, back to Washington County Chancery Court.

The proposed settlement would have Red Dog pay nearly $250,000 to buy 7 acres of land on the WCIP, and another $200,000 (so far) in $500-a-day fines for operating the limestone mine in violation of Washington County zoning rules.

Red Dog/GRIID will then face additional expenses by building a new Bitcoin mine, which the proposed settlement gives it until the end of 2024.

The new debentures come with warrants to the lenders giving them access to “Class B” units of GRIID shares. If GRIID goes public, Dwaine Alleyne, the lender of $250,000, can own 8,616 shares and Endeavor Blockchain LLC, the lender of $2 million, can own 69,278 units.