Poolin Auction Reopens as Hut 8 Deal Ties $80 Million to Data Center Milestones

A New Jersey bankruptcy judge approved another round of bidding for Poolin’s Texas mining assets after a dispute over the selection of Hut 8 (NASDAQ: HUT), with new baseline agreements providing for as much as $180 million, including $80 million tied to future data center transactions.

The September 30 order schedules an auction in open court for October 2 at 10 a.m. Eastern time, followed by a sale hearing. Competing bids are due at noon Eastern on October 1. Hut 8’s affiliates remain the baseline buyers under agreements worth up to $180 million, comprising $100 million at closing and $80 million contingent on qualifying data center transactions.

The agreements attached to the order provide for $100 million at closing and up to $80 million in milestone payments. That differs from the $140 million transaction Poolin selected earlier in September and underscores the importance of distinguishing headline sale values from cash available to creditors at closing.

The conditional payments connect the bankruptcy sale directly to the race for AI computing capacity. They would be triggered by qualifying data-center leases using the acquired power rights, or certain property-and-power-rights transfers for data-center development, subject to the agreements’ terms.

The definition covers AI, high-performance computing, cloud and colocation facilities, while excluding facilities primarily used for cryptocurrency mining.

The dispute began after the September 10 auction, where Thor CALAP’s $180 million offer finished ahead of Hut 8’s $179 million bid, according to a September 23 declaration by Poolin Chief Restructuring Officer Michael DuFrayne.

DuFrayne said negotiations with Thor subsequently stalled over a larger deposit, provisions giving the buyer discretion over energy approvals and title, and a proposed shift in closing from November 11 to December 15. The later date was intended to accommodate an energy-approval document expected around December 10, he said.

Poolin then negotiated with Hut 8 and selected a $140 million transaction, arguing that greater certainty of closing outweighed Thor’s higher stated price. DuFrayne described the alternatives offered by Hut 8 as $140 million in cash at closing or a higher overall price incorporating deferred consideration.

Thor disputed that account of its obligations. In a September 16 objection, it argued that Poolin sought material changes to already-negotiated purchase agreements after declaring Thor the winner, including a larger deposit and reduced buyer discretion. Thor said those demands conflicted with the approved bidding procedures.

The new order records an agreement reached at the September 29 hearing and finds that continuing the auction is a reasonable exercise of Poolin’s business judgment intended to maximize creditor value. It also finds Hut 8 and its affiliates acted in good faith in connection with the agreements, bid protections and bidding process.

Hut 8, its purchasing affiliates and Thor Equities are deemed qualified bidders. CES Acquisitions and/or Pecos Industrial Development may qualify if they satisfy the requirements by the deadline. Pecos was identified in the earlier auction notice as a designee of Fluidstack.

Competing purchase agreements must offer terms at least as favorable to the bankruptcy estates as Hut 8’s attached agreements.

In return for keeping its bids binding and irrevocable through the sale hearing, Hut 8 receives a $3 million breakup fee and $250,000 expense reimbursement if another buyer ultimately wins and closes. Those amounts would come from the competing sale’s cash proceeds, with reimbursement subject to invoice review.

The attached contracts show why access to electricity is central to the contest. Pyote’s closing conditions require confirmation of at least 54 megawatts of firm available capacity. The Tarbush agreement requires approvals for 176 megawatts at an adjacent property, including confirmation following ERCOT’s Batch Zero review, and contemplates potential expansion to 300 megawatts by the end of 2029.

These are contractual requirements and potential capacity, rather than confirmation that an AI campus is operating.

Hut 8 describes interconnections, substations and other electrical infrastructure as the foundation of its data-center development business. Poolin’s transaction would put a substantial portion of creditors’ potential proceeds behind the subsequent commercialization of those power rights.

Poolin and its U.S. affiliates filed for Chapter 11 on July 22 with about $173.1 million in pre-bankruptcy obligations, including roughly $163.7 million in unsecured IOUs issued to wallet customers after withdrawals were frozen in 2022. The new order does not set a creditor recovery rate.