Last Updated on January 14, 2023 by Bitfinsider

Bitfarms is attempting to restructure a loan with BlockFi in order to avoid default as the value of its equipment falls.

Bitfarms’ Backbone Mining Solutions signed a $32 million equipment financing agreement with BlockFi Lending LLC last year. Bitfarms’ 20-megawatt operational crypto mining plant in Washington state is owned and operated by BMS. The loan is secured by BMS assets with a market worth of around $5 million, while the outstanding principle and interest is around $20 million.

“Bitfarms initiated preemptive efforts to maximize financial flexibility and decrease indebtedness and capital expenditure requirements in 2022,” Bitfarms CFO Jeff Lucas said in a statement. “In light of today’s adverse market conditions, we are attempting to amend our Washington state financing facility in order to attain terms that are more consistent with the market outlook and our business plan.”

Mining equipment has lost value after miners embarked on a shopping binge while bitcoin was at all-time highs in 2021. However, as cryptocurrency prices have fallen and energy costs have risen, mining has become a significantly less profitable endeavor, and miners across the board are battling to survive.

Bitfarms and its subsidiaries have about $36 million in cash and unencumbered crypto assets as of December, which the firm believes provides adequate liquidity to maintain continued operations for the foreseeable future and to make future payments under its various other loan arrangements.

Bitfarms and its subsidiaries are owing to the tune of $47 million, with around $20 million owed under the BlockFi loan.