Bankrupt Bitcoin miner Rhodium Enterprises has a new lifeline: $30 million from Galaxy Digital.
Rhodium Enterprises, a Bitcoin mining company that recently filed for bankruptcy, has received court approval to secure a loan in either United States dollars or Bitcoin. The firm has been authorized to choose between a $30 million loan or 500 Bitcoin (BTC) from Galaxy Digital, a blockchain company led by Mike Novogratz.
However, the terms differ: the dollar loan carries a 14.5% annual interest rate, while the Bitcoin loan offers a lower rate of 9.5%, according to Bloomberg.
As per the latest crypto news, Rhodium has the option to repay the Bitcoin loan in U.S. dollars based on the “reasonable published market spot prices” at the time of repayment, as long as it’s done before the due date.
This is an unusual move in the crypto sector, particularly for bankruptcy financing, given Bitcoin’s notorious price volatility. As of the last month, Bitcoin’s price has dropped nearly 11%, according to CoinMarketCap data.
On August 24, Rhodium Enterprises voluntarily filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, citing liabilities of up to $100 million. The filing also includes six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW.
The company’s debts are reported to be between $50 million and $100 million, with total assets valued between $100 million and $500 million. The Chapter 11 filing allows Rhodium to continue operations while restructuring its debts and negotiating new repayment terms.
Bitcoin mining companies, including Rhodium, are feeling the strain of reduced mining rewards following the April Bitcoin halving.
Additionally, these companies are grappling with rising debt and the fallout from previous mismanagement. In response, cash-rich miners like Riot Platforms and Cleanspark have been acquiring other mining operations with turnkey facilities to boost their short-term hashrate and power capacity.
Meanwhile, capital-constrained miners like Iren and Cipher are focusing on greenfield opportunities that require less immediate capital.
Further highlighting the financial pressures in the industry, on August 21, Bitcoin mining firm Bitfarms announced its acquisition of Stronghold Digital Mining for approximately $125 million, including assumed debt of about $50 million.
