Bitcoin miner Argo Blockchain announced on Wednesday that it reached a deal with Galaxy Digital in an effort to avoid the threat of bankruptcy. Upon the agreement, Galaxy Digital will acquire Argo’s top mining facility Helios in a $65 million deal.
Argo also gets a $35 million loan from Galaxy Digital to cut off its debts.
Argo Blockchain CEO Peter Wall noted in the official announcement that in face of the ongoing bear market, Argo’s urgent attempt is to keep the business afloat.
Galaxy to the Rescue!
Galaxy Digital’s bailout helps Argo pay the debts and continue operating. The rescue package will be used to “pay off the debt that we owed to NYDIG and a tiny bit to another secured lender,” according to Wall.
Launched in May 2022 in Dickens County, Texas, Helios is Argo’s bitcoin mining facility capable of 200 megawatts (MW) of power. Compared to Baie Comeau and Mirabel, it is Argo’s largest operation in terms of electricity support.
The CEO added that Argo Blockchain and Galaxy Digital have also reached a 2-year agreement that allows the company’s mining machines to keep operating at Helios.
“Staying at Helios will also allow us to continue to access power through the Texas grid and participate in the ancillary services, which are provided by Ercot.”
The news came shortly after Argo announced NASDAQ delisting on Tuesday following the leaked document earlier this month.
On Dec. 12, Will Foxley, Director of Content at Compass Mining, shared a screenshot indicating that Argo Blockchain was preparing for a bankruptcy filing. The document was sent by accident, as stated by Foxley.
In fact, a series of negative news broke out before the bankruptcy rumors. On December 9, the UK’s Financial Conduct Authority (FCA) temporarily suspended shares of Argo after the company disclosed a drop in November revenue.
The company had announced in October that it was unable to get $27 million in capital from a strategic investor, which caused the shares to drop by more than 70%.
Early in October, when the firm announced a range of initiatives, including the sale of bitcoin mining equipment, Argo stock started to decline. In November, Argo mined 198 bitcoins, which is less than the 204 BTC mined in October, according to the company’s update.
Bitcoin Mining In Crisis
The Bitcoin mining industry is undergoing a major crisis following a series of events including FED’s interest hikes, Bitcoin’s price decline, and electricity’s escalating cost.
Many Bitcoin miners decided to shut down a number of their machines or even sell off hardware to cover the debts. This also contributes to the drop in the price of Bitcoin mining machines.
Argo is not the only miner that struggles to survive the bear market. Core Scientific, one of the US largest bitcoin mining companies, filed for bankruptcy protection on Dec. 21.
The Texas-headquartered miner also announced its plan to stay afloat amid the crisis while negotiating a restructuring agreement with lenders and creditors.
According to the official announcement made by Core Scientific, the decision was made as a result of decreased operating efficiency and affected liquidity as a result of the long-term drop in prices of bitcoin, rising costs associated with electricity, and the fact that some customers rented out their servers.
Reportedly, the company was also impacted when the virtual currency lending platform Celsius Network failed to pay its creditors. The two businesses are at odds with one another because of the web hosting services that Core Scientific provides to Celsius.
On the other hand, the acquisition provides Galaxy with a significant opportunity to develop into one of the largest bitcoin miners in the world.
Previously, Grayscale would frequently engage in the process of purchasing mining equipment directly from miners. The CEO of Grayscale stated that the entire industry is facing a great deal of pressure, yet this situation presents an opportunity for investors.