The Applicant, Yimiao, was the owner of units of cryptocurrency mining equipment, which were configured to mine two types of cryptocurrencies, ‘Dogecoin’ and ‘Litecoin’. The units were held by the respondent, CIT, which alleged that it had a security interest arising under the Personal Property Securities Act 2008 (Cth). Due to various technological factors, all parties agreed that the value of the equipment was rapidly depreciating.

Yimiao sought an interlocutory order for delivery up of its equipment, supported by various undertakings. The primary judge refused the application, appearing to find that the undertakings given by Yimiao were inadequate to protect CIT’s alleged security interest.

The Court of Appeal held that the primary judge erred by failing to appreciate the effect of the dissipation of the value of the assets on their value to CIT as a security. Although CIT had contended that there was a real risk that the equipment would be worth nothing by the time of trial, Yimiao submitted that the depreciation affected the value of CIT’s security interest equally (since the value of the interest could be worth no more than the value of the machines). The primary judge failed to address this submission. Although it was not necessary to decide, the Court also observed that there was real merit in the argument that the primary judge’s decision was plainly unjust, such that it may be inferred that there was a failure properly to exercise his discretion.