Bitcoin Miner Greenidge Generation Holdings Inc. and Support.com, Inc. (Nasdaq: SPRT) announced a merger agreement on March 24, 2021. It’s a great way for GGH to be listed on the NASDAQ and offers a much-needed cash infusion to grow their Bitcoin mining operations. As stated in their recent press release, the merger will make Greenidge Generation Holdings Inc. the first publicly traded bitcoin mining company with a wholly-owned power plant! The new ticker is GREE.
Based on its current buildout and expansion expectations, Greenidge expects to have at least 500 megawatts (“MW”) of mining capacity by 2025, compared to 19 MW today. Support.com is expected to provide Greenidge with an estimated $33 million of additional cash. Pro forma for the merger, the combined companies currently have over $70 million of net cash.
The definitive agreement to merge will be in a stock-for-stock transaction, subject to Support.com shareholder approval and other customary closing conditions. Upon completion of the merger, Support.com stock and option holders will collectively own nearly 8% of the combined company’s common stock and Greenidge stockholders will own approximately 92%. Support.com will become a wholly-owned subsidiary of Greenidge, which is expected to be listed on the Nasdaq. The merger is expected to close in Q3 2021.
The company’s release goes on to state, Greenidge Generation Holdings Inc. includes Greenidge Generation LLC. It is a vertically integrated Bitcoin mining and power generation facility in Upstate New York. Greenidge’s environmentally sound 106 MW natural gas plant currently powers 19 MW of mining capacity, which is expected to more than double to 41 MW by the end of Q2 2021 and reach 85 MW by the end of 2022.
Greenidge is expected to be the only U.S. public company operating a vertically integrated power generation asset and bitcoin mining operation and plans to replicate its vertically integrated mining model at other power sites and expects to achieve at least 500 MW of mining capacity by 2025. Support.com remains a leader in customer and technical support solutions delivered by home-based employees.
Greenidge’s integrated business model delivers significant competitive advantages compared to
Bitcoin mining peers. It owns its power generation assets and operates its own mining
equipment, unlike most other Bitcoin miners. This allows Greenidge to operate without relying on highly variable third-party power purchase and hosting agreements that are subject to renegotiation or other cost volatility.
The Company also boasts low fixed costs shared between its power generation and Bitcoin mining operations. In addition, Greenidge’s Upstate New York location provides access to some of the lowest-cost natural gas in North America, resulting in an average mining power cost of approximately $22/MWh3.
Projected EBITDA (assuming $300/MWh mining economics at a bitcoin price of $49,000) the current difficulty and current mining fleet efficiency 2 Hashrate of 1.1 EH/s is estimated to be achieved by end of Q2 2021; hash rate of 2.6EH/s is estimated to be achieved by year-end 2022. As of February 28, 2021, Greenidge mined 1,186 bitcoins at a net variable cost of approximately $2,869 per bitcoin. Greenidge expects their 2021 EBITDA to be approximately $50 million with a run rate in excess of $160 million of EBITDA by Q4 2022.
The hash rate is the measuring unit of the processing power of the Bitcoin network. The BTC network makes intensive mathematical operations for security purposes. When the network reached a hash rate of 10 Th/s, it meant it could make 10 trillion calculations per second (courtesy of bitcoin.org).
Greenidge’s CEO Jeff Kirt stated, “This merger is an important next step for Greenidge as we build upon our existing, integrated, and proven platform for bitcoin mining and generation of lower-carbon affordable power. The transaction is a validation of our transformational journey, our proprietary relationships, and our industry expertise. It will allow for public market growth capital to propel Greenidge as we look to replicate the business model, which we have successfully executed in Upstate New York, in other locations. With our proven track record and investment both from funds sponsored and managed by Atlas Holdings LLC and major institutional investors, Greenidge is uniquely positioned to capitalize on future growth opportunities.”
“We are extremely pleased to have reached this agreement to merge with Greenidge,” said Lance Rosenzweig, President, and Chief Executive Officer of Support.com. “This transaction will build upon Greenidge’s successful business by providing them with additional cash funding and a public currency to fund their growth plans, as well as important new capabilities including customer interface, security software, and privacy expertise.
As Greenidge looks to scale and seize new opportunities for growth, we are their ideal partner. In addition, the transaction represents a significant value proposition for our shareholders by providing them with enhanced liquidity and the opportunity to participate in the growth of what we believe will
be a successful competitor in the rapidly evolving domestic bitcoin mining space.”
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