Bitfarms Renegotiates BlockFi Loan to Avoid Default

Published on:

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.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked. To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor
Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.