Scarborough Magistrates' Court was told Alan Lightfoot (46) of Market Place, Whitby had "snapped" when he heard a busker outside his home and was drunk at the time.
The incident happened on 16 June at 3pm in the afternoon in Church Street. The prosecution told the court that Lightfoot and other residents in Market Place had complained about buskers playing in the area before.
Katy Varlow, prosecuting, said that on the day in question Lightfoot's patience snapped and he confronted Ian Caulfield, who was playing a guitar in the street.
She said: "Lightfoot approached Mr Caulfield and positioned himself so he was speaking into his ear and said 'move on or I'll wrap this around your neck' and he moved a double-edged knife to within three inches of Mr Caulfield's neck."
She said Lightfoot was tracked down by police and admitted being quite drunk at the time.
Lightfoot, defending himself, pleaded guilty and said he was very sorry for what had happened.
"I had just been told I had heart disease and for all purposes have become house bound," he said.
"Where I live I am constantly bombarded by noise all day long.
"I had been drinking and I have to say drink and tablets don't mix."
He said he couldn't remember taking out a knife with him to confront the busker.
"I can only say how sorry I am and I shouldn't be standing here, I am very sorry," he added.
Chief magistrate, squadron leader Don Graham, told Lightfoot they were adjourning a decision on his sentence until they had further reports and that the bench took all matters concerning weapons very seriously.
He warned him that all options would be open to the court including a custodial sentence.
The case was adjourned until 21 July.