Galaxy Digital bails out Bitcoin Miner Argo amid bankruptcy rumors

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Bitcoin miner Argo Blockchain announced on Wednesday that it has reached an agreement with Galaxy Digital in a bid to avert the threat of bankruptcy. Following the deal, Galaxy Digital will acquire Argos’ main mining facility, Helios, in a $65 million deal.

Argo also obtains a $35 million loan from Galaxy Digital to reduce its debts.

Argo Blockchain CEO Peter Wall noted in the official announcement that in the face of the ongoing bear market, Argos’ urgent attempt is to keep the company afloat.

Galaxy to the rescue!

Galaxy Digitals bailout helps Argo pay off debts and keep operating. The bailout will be used to pay off debt we owed NYDIG and a tiny bit to another secured lender, according to Wall.

Launched in May 2022 in Dickens County, Texas, Helios is an Argos bitcoin mining facility capable of 200 megawatts (MW) of power. Compared to Baie Comeau and Mirabel, this is Argos’ largest operation in terms of power support.

The CEO added that Argo Blockchain and Galaxy Digital have also entered into a 2-year agreement that allows the company’s mining machinery to continue operating at Helios.

to witness it,

Staying with Helios will also allow us to continue to access electricity through the Texas grid and participate in ancillary services, which are provided by Ercot.

The news came shortly after Argo announced its delisting from NASDAQ on Tuesday following a leaked document earlier this month.

On December 12, Will Foxley, Chief Content Officer at Compass Mining, shared a screenshot indicating that Argo Blockchain was preparing for a bankruptcy filing. The document was sent by accident, as Foxley said.

In fact, a series of negative news broke before the bankruptcy rumors. On December 9, the UK’s Financial Conduct Authority (FCA) temporarily suspended Argo’s shares after the company revealed a fall in its earnings in November.

The company announced in October that it was unable to secure $27 million in capital from a strategic investor, sending shares down more than 70%.

In early October, when the company announced a series of initiatives, including the sale of Bitcoin mining equipment, Argo stock began to decline. In November, Argo mined 198 bitcoins, less than the 204 BTC mined in October, according to the company’s update.

Bitcoin mining in crisis

The Bitcoin mining industry is going through a major crisis following a series of events, including rising Fed interest, falling Bitcoin prices, and escalating electricity costs.

Many Bitcoin miners have decided to shut down a number of their machines or even sell hardware to cover their debts. This also contributes to the lower price of Bitcoin mining machines.

Argo is not the only miner struggling to survive the bear market. Core Scientific, one of the largest bitcoin mining companies in the United States, filed for bankruptcy protection on December 21.

The Texas-headquartered miner also announced plans to stay afloat amid the crisis while negotiating a restructuring deal with lenders and creditors.

According to the official announcement made by Core Scientific, the decision was made due to reduced operational efficiency and affected liquidity due to the long-term decline in bitcoin prices, rising costs associated with the electricity and the fact that some customers have rented their servers.

Reportedly, the company was also hit when virtual currency lending platform Celsius Network failed to pay its creditors. The two companies are at odds over the web hosting services Core Scientific provides to Celsius.

On the other hand, the acquisition provides Galaxy with a significant opportunity to become one of the largest bitcoin miners in the world.

Previously, Grayscale frequently engaged in the process of purchasing mining equipment directly from miners. Grayscale’s CEO said the entire industry is facing a lot of pressure, but this situation presents an opportunity for investors.

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