Bitcoin Miner Argo Will Avoid Bankruptcy With $100 Million Bailout From Novogratzs Galaxy

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Bitcoin miner Argo Blockchain (ARBK) will avoid filing for bankruptcy, after agreeing to sell its Helios mining facility in Dickens Country, Texas, to Galaxy Digital (GLXY) for $65 million.

The miner will also get a new $35 million loan from Mike Novogratz’s crypto-focused financial services firm, which will be secured by Argo’s mining equipment, according to a statement sent to CoinDesk.

“Over the past few months, we have been looking for a way to continue to exploit the bear market, reduce our leverage, and maintain access to Texas’ single power grid,” Argo CEO Peter Wall told CoinDesk. . “This deal with Galaxy achieves all of those goals, and it allows us to live to fight another day,” he added.

The transaction will help Argo strengthen its balance sheet and avoid bankruptcy after it found itself in a precarious position when a $27 million financing deal fell through in October. Earlier this month, the miner said it was in advanced negotiations to sell some of its assets and complete an equipment financing transaction to avoid filing for Chapter 11 bankruptcy.

The deal was structured to strengthen Argo’s balance sheet and capital structure, Chris Ferraro, president and chief investment officer at Galaxy, told CoinDesk. When the miner launched its process, “we were able to completely solve the problem for Argo, while accelerating the expansion of our own mining capabilities,” he added.

The crypto miner, whose shares trade on the London Stock Exchange (ARB) and Nasdaq (ARBK), said on Tuesday it had requested a 24-hour suspension from US trading. The London Stock Exchange was already closed due to a UK bank holiday.

Argo is among several miners struggling to stay afloat as rising energy prices drive up costs, while stubbornly low bitcoin prices squeeze revenue. This month, Core Scientific (CORZ), one of the biggest miners in terms of computing power, filed for bankruptcy, while Compute North, another big space company, filed for bankruptcy. filed for Chapter 11 bankruptcy at the end of September. Bitcoin miner Greenidge also said it has reached a debt restructuring agreement with its lender NYDIG, although bankruptcy risks still loom for the company.

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One of the greatest miners

Helios, which was Argo’s largest mining facility, has up to 180 megawatts (MW) of electrical capacity and will become Galaxy’s flagship mining operation. The facility began operations in May under Argo, with a plan to achieve 800 megawatts (MW) of power consumption and 20 exahash/second (EH/s) of computing power. If expanded to full capacity, it could make Galaxy one of the biggest bitcoin miners.

“Quality infrastructure and access to low-cost energy are the cornerstones of a successful mining operation, making the acquisition of Helios an incredible step for the growth of Galaxys mining business,” said Amanda Fabiano, head of mining at Galaxy, said in the statement.

Additionally, Argo will enter into a two-year hosting agreement with Galaxy, guaranteeing a place for Argos computers to continue mining at the Helios facility, according to the release.

Bear market opportunity

The brutal winter in crypto, exacerbated by the implosion of crypto exchange FTX, has not only caused pain to the industry, but also created opportunities for some investors to acquire crypto assets at much higher valuations. less expensive.

Read more: Goldman Sachs to spend ‘tens of millions’ on discounted crypto investments after FTX implosion: Report

The transaction will be the second of its kind in a month for Galaxy. On Dec. 13, Galaxy purchased crypto self-custody platform GK8 from bankrupt crypto lender Celsius for a “significantly lower” price than what Celsius paid a year ago.

Helios will be the second planned bitcoin mining facility that Galaxy will own and operate, as the company said it is actively working on several longer-term solutions to diversify and reduce counterparty risk for its mining unit. Galaxy recently began construction on its first proprietary mining site in Texas, which is expected to be fully operational by January 2023, according to its third quarter earnings report.

Galaxy aspires to be one of the most trusted nodes in the decentralized future, Ferraro said in the statement. The acquisition of Helios represents another step in our two-year journey in bitcoin mining that increases our scale of operations and the breadth of our solutions, creating lasting value for the largest mining network. decentralized digital assets and for shareholders, he added.

Read more: Exposure to FTX contagion from Bitcoin miners may amplify industry pain

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