Bitfarms Pays $7.75M To Settle Debt With BlockFi
Bitfarms, one of the world’s leading Bitcoin mining companies, recently announced a significant milestone after settling an outstanding loan with BlockFi, the defunct digital asset lender. The amount owed to BlockFi by Bitfarms was a staggering $7.75 million, and the settlement of this loan marks a significant milestone for Bitfarms.
The company announced that they had paid off their $21 million debt to BlockFi in a one-time payment of $7.75 million, effectively ending their brief affiliation with the now insolvent crypto lender. The agreement was reached after the mining firm alerted that they might need help to meet their BlockFi loan requirements.
Jeff Lucas, Bitfarms’ Chief Financial Officer, commented that this successful negotiation and settlement, in conjunction with the earlier restructuring and termination of their capital expenditure commitments in December, further their objectives to reduce debt.
The arrangement between Bitfarms and BlockFi concentrates on Backbone Mining Company, its wholly-owned subsidiary in Washington. As of January 31, 2023, the cumulative principal and interest on the equipment financing loan of $32 million provided by BlockFi in February 2022 had risen to $21 million.
Following the agreement, all of Backbone’s resources, including its 6,100 miners, are now free from any claims or obligations. Recent reports suggested that Bitfarms was attempting to modify its loan agreement with BlockFi to obtain “more beneficial terms” and lessen Backbone Mining’s commitments.
The original loan facility was secured against Backbone Mining’s resources, including its mining hardware and a portion of the Bitcoin its rigs generated. The assets supporting Backbone Mining’s loan decreased considerably during the bear market.
Finding The Right Solutions
Meanwhile, BlockFi submitted for Chapter 11 insolvency on November 28, 2022, weeks after the collapse of the FTX crypto exchange. In a statement, BlockFi declared that it has $256.9 million on hand and has taken steps to ensure payment of wages and continuation of employee benefits without disruption.
It filed motions to implement a Key Employee Retention Plan to guarantee that trained staff remain for essential activities. It also crafted an internal strategy to lessen costs.
The court documents revealed that the list of top 50 creditors of BlockFi ranged from West Realm Shires Inc. (FTX US) with $275 million in unsecured claims to an unidentified creditor with $999,650.
The U.S. Securities and Exchange Commission (SEC) was shown to have a debt of $30 million. BlockFi had recently settled with the SEC for $100 million in February 2021 for failing to register accounts the regulator deemed as securities.
The document named West Realm Shires and the SEC, as well as Ankura Trust, which provides corporate trust services “in distressed situations” and is owed over $729 million. An unnamed creditor was listed third, with over $48.5 million in debt.
Bitfarms’ decision to pay off its loan with BlockFi shows the company’s commitment to financial responsibility and ability to manage its finances effectively. The settlement of the loan is a significant milestone for the Bitcoin mining industry and a testament to mainstream institutions’ growing acceptance of Bitcoin.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
