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"thoughts on what's happened to the $39.9m I mentioned a few posts down?"

sorry - didn't see this earlier but suggested a few possibilities in my other reply.

Looking at it a bit more though, part of it does seem to be down to NYDIG/bitmain. The total funding was up to $97m but PW said recently the amount outstanding was $84m (or $882m)? So either they didn't take all the funding available or they've paid some back already. Either way it appears more has been paid out to bitmain effectively from their own pocket so, depending on timings, this could be part of the $39.9m.

$9m of it is also normal cash burn (at least my estimate of it ) in the period in question (Oct to Dec) plus you mentioned Galaxy and for some reason I've got $7m in my head for that?

I mentioned consultancy costs and I'm sure they've burned a lot already on trying to extract themselves from this mess even before the announcement of the three organisations they've engaged.

I also can't remember what happened to the transformers and whether it is possible they had outstanding commitments on these too?

One other thing that will be giving them a headache is the value of assets they are holding on the balance sheet as the rigs they do have will be worth a lot less than their book value and I can't see how they can avoid writing these down - but this shouldn't affect cash they need to hold.

I still feel there is something missing but we only have Q2 to go on and that was complicated by a lot of timing issues (including whopping prepayments) plus a lot has happened since then so it's hard to gauge what the position should really be now.

"So basically your example is a 12 month loan with selling BTC as the source of repayment, and where ARB hedge BTC at $15k".

Not really. What I'm describing is ARB simply selling it's BTC in advance at a low enough price to attract someone to make an advance purchase. No hedging from ARB, though of course they could do that too to give them back most of any upside should BTC increase but that would be yet another cost to eat into their cash.

"And are you still sure cash burn is as little as $2-3m a month?"

It could $3m tops but as I've said before what I'm talking about is 'normal' cash burn i.e. from operations (including overheads) and interest. The interest is at fixed rated and why would normal, ongoing overheads increase? Power, as AB says, is known

So that's the sort of figure that is ongoing but clearly other stuff has been going on but we are just in the dark on what it is. Candidates could include:

A temporary spike in legal/consultancy costs (we know they've engaged at least three new parties - and they won't come cheap)
Committed costs to intel and/or penalty charges?
Withholding of funds from NYDIG for the last rigs so that not only did they sell them on the cheap they had to pay for them out of their own funds in the first place
Severance payments
Other unknown one-off costs

It is surprising that they are so cash-strapped despite the measures but I can't see that it is due 'business-as-usual' costs.

HC - My example was simplified (I was cooking the tea at the time)! The issue you suggest wouldn't arise in practice as the deal ought to remove it. For example It could be we give you $27m upfront and you give us 150 BTC a month for 12 months - or longer until the total is 1800. Or it could be you give us everything you mine until it comes to 1800.

The main risk for the lender is that ARB still goes out of business (the BTC price they would hedge against I imagine so that they would have an 'assured' margin).

I can see this sort of thing being viable to cover short term liquidity issues but ARB's liquidity issue is ongoing and indefinite i.e. it lasts until BTC recovers enough which could be anything from a few months and never.

Btw I’m assuming ARB hand over the agreed number of coins at the end of each month they mine them in this situation - but reading other comments maybe I’ve misunderstood the suggestion?

It’s not hedging or at least that’s not the main point of it. It is getting revenue up front so that operations can continue several months or more instead of currently one. Of course it just pushes the problem down the road and if BTC doesn’t recover then will have to do the same again but from an even worse position.

The cash burn is $2-3m assuming they sell all their bitcoin each month but in this scenario they have little or no revenue coming in so cash burn will be $5-6m each month. So in my example less than 6 months operations will be covered by selling up to a year’s BTC.

They could sell more than one year’s worth and so get more cash upfront but then they are in a very weak position at the end of the period even if BTC rises significantly as they haven’t benefited from the rise in the meantime unlike their competitors.

This sort of thing is not uncommon but in ARB’s case I don’t think it works as their cash burn is too high and requires them to sell too much of what they mine and for too long. They also need to sell it a very attractive discount given the risks to the other party.

How about $27m up front for 150 BTC each month for a year.

Other party gets cheap BTC ($15k), ARB gets accelerated cash flow.

Still plenty of issues but can see the logic.

“How they'll ever make enough money to pay back a billion dollars is the question though”

I think the question is more how much of it will lenders think they can get back under each option if they can’t get it back completely under any.

In this way it’s a very similar situation probably to the one NYDIG find themselves in with the difference being that NYDIG are the only (single) lender of note.

HC - I agree the B Riley proposal is unlikely to get anywhere but what it does highlight is how the amount of cash drain is relatively small once you take away the debt repayments. So perhaps those lenders might come up with their own solution if they feel they would get more from keeping the business going rather than picking over the assets.

Certainly an intriguing situation and tempted to get involved but maybe holding one distressed miner is more than enough! Besides, even if a solution is found it may not be one that existing shareholders will like.

“some mortgages fixed against the owned data centres in Canada by the looks of things. I’d assume them to have pretty decent security as well.”

That’s true Wolf but these are relatively small (about $5m I think) so whilst not strictly true I think what HC is saying is essentially correct - assuming NYDIG rank ahead of the unsecured bond holders.

Agree with your comments on Ch11.

I thought part of their proposal was to suspend the loan repayments so I didn’t include them.

I just took my numbers direct from Q3 accounts which seem to suggest cash outflow of around $10m for the quarter (before any capex, loan repayments etc.)

"they are haemorrhaging far, far more than $3m a month ($72m supposedly giving them two year's runway) - I believe they are burning about $16m a month."

Only had a quick look but think their $3m a month seems reasonable assuming no principal payments or capex. Does seem though a desperate red or black gamble by them unless the additional financing is given priority over other loans?

“ It doesn't look like rigs costs are already sunk since they still have £158m net in property/plant/equipment category on June-2022 balance sheet”

Rig costs are already sunk i.e. the cash has been spent. They have value on the balance sheet as that’s the book value that hasn’t yet gone through P/L via depreciation but this isn’t a cash cost.

I think all miners are probably still covering variable costs (which is just power plus a few additional costs perhaps).

“I had £1K and i regretted it”

Almost as believable as PW.

Just lots of ghouls, gloaters and generally very unpleasant people.

Don’t think it’s because any big investors are waiting in the wings.

...and of course they've got Alex.

Sounds like plenty of accountants and other finance professionals have been brought in to me.

LTH - It's definitely closer to $6bn than $5bn. The revenues have not been enough to cover expenses (as published figures have shown) so there has been nothing available to pay any loans back - and even if there was then it could only be paid back with court approval so we would know about it.

As I said it was just over $5bn before the new financing and this has added $935m less (as I belatedly remembered) the $271m refinancing of RoW debt. It did NOT pay down this debt though it just transferred the RoW debt to the DIP lenders.

...should add though that $271m also was used to refinance loans that sit in RoW and outside of the Chapter 11 but I still think $6bn as a round number is OK as the debt at petition date was actually a bit over $5bn.