Bitfarms Looking To Avoid Default On BlockFi’s $20 Million Loan
- As the value of the equipment declines, Bitfarms is attempting to restructure a loan with BlockFi in order to prevent default.
- Only $5 million worth of assets, including some mining equipment and the Bitcoin they generate, are used to secure the $20 million in outstanding debt owed by the BlockFi.
- The miner has been making an effort to pay off its debt, but there are still $47 million in unpaid loans, including the loan with BlockFi.
Bitcoin miner Bitfarms may have stopped paying installment payments on a loan from insolvent cryptocurrency lender BlockFi already or may do so in the future, thus defaulting on the loan, the company warned in a news release on Friday. Bitfarms is attempting to restructure the loan as a result.
Backbone Mining Solutions from Bitfarms signed a $32 million equipment financing agreement with BlockFi last year. The 20-megawatt active crypto mining facility owned by Bitfarms in Washington state is run by BMS.
The outstanding principal and interest on the loan, which totals nearly $20 million, is secured by certain BMS assets with a market value of around $5 million. As a result, the miner is exploring loans with better terms and lowering its commitments.
Bitfarms CFO Jeff Lucas said in a statement:
“During 2022, Bitfarms began taking proactive actions to increase financial flexibility and to reduce indebtedness and capital expenditures.”
The company is various to make the $36 million cash and unencumber crypto assets Bitfarms and its subsidiaries held as December liquidity enough to maintain ongoing operations for the foreseeable future and future loan agreements.
The Canadian company Bitfarms has been attempting to pay down its debt, but there are still $47 million in unpaid loans, including the one with BlockFi.
After miners went on a spending binge when Bitcoin reached record highs in 2021, the value of mining equipment fell. However, mining has become a far less profitable endeavor as cryptocurrency prices have fallen and energy costs increased, and miners globally are battling to survive.
The value of miners’ crypto assets and mining equipment has decreased. Compute North and Core Scientific, two of the major companies in the sector, have requested Chapter 11 bankruptcy protection. Argo Blockchain is also struggling financially.
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