Bitcoin Miner Argo Blockchain Will Avoid Bankruptcy With $100 Million Bailout From Novogratz’s Galaxy Digital
Bitcoin miner Argo Blockchain (ARBK) will avoid filing for bankruptcy protection after it agreed to sell its Helios mining facility in Dickens Country, Texas, to Galaxy Digital for $65 million.
The miner will also get a new $35 million loan from well-known investor Michael 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’ve been looking for a way to continue mining through the bear market, reduce our debt load, and maintain access to the unique power grid in Texas,” Argo CEO Peter Wall told CoinDesk. “This agreement with Galaxy accomplishes all of these goals, and it allows us to live to fight another day.”
The transaction will help Argo strengthen its balance sheet and avoid bankruptcy after it found itself in a precarious situation when a deal for $27 million in financing 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 with Galaxy was structured to increase Argo’s balance sheet and capital structure, Chris Ferraro, president and chief investment officer of Galaxy, told CoinDesk. When the miner started the process, “we were in a position to completely solve the problem for Argo, while accelerating the expansion of our own mining capabilities,” he added.
The crypto miner’s shares more than doubled in early trading on the London Stock Exchange. On Tuesday, the company called for a 24-hour halt to trading in its Nasdaq-listed stock, while the London market was closed for a UK bank holiday.
Argo is among several miners struggling to stay afloat amid rising energy costs, low bitcoin (BTC) prices.
Earlier this month, Core Scientific (CORZ), one of the largest miners in terms of computing power, filed for bankruptcy, and in September, Compute North, another major firm in the sector, filed for Chapter 11 bankruptcy protection. Last week, bitcoin miner Greenidge said it reached a debt restructuring deal with its lender Nydig, although the prospect of a bankruptcy filing remains looming.
Downtown the size of Texas
Helios, which was Argo’s largest mining facility, has a power capacity of up to 180 megawatts and will become Galaxy’s flagship mining operation. The facility began operations in May under Argo, with a plan to reach 800 megawatts of energy consumption and 20 exahashes/second of computing power. If expanded to full capacity, it could make Galaxy one of the world’s largest 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 milestone for the growth of Galaxy’s mining business,” Amanda Fabiano, head of mining at Galaxy, said in a statement.
In addition, Argo will enter into a two-year hosting agreement with Galaxy, securing a place for Argo’s computers to continue mining at the Helios facility, according to the statement.
Bear market opportunity
The brutal crypto winter, exacerbated by the implosion of crypto exchange FTX, has created opportunities for some investors to acquire crypto assets at cheaper values.
Read more: Goldman Sachs to spend ‘tens of millions’ on discounted crypto investments after FTX implosion: Report
The transaction will be the second such deal in a month for Galaxy. Earlier this month, a bankruptcy judge approved a deal for Galaxy to buy crypto self-custody platform GK8 from bankrupt crypto lender Celsius Network for a price “significantly less” than what Celsius paid for GK8 a year ago.
Helios will be the second bitcoin mining facility that Galaxy will own and operate, as the firm said it is working on several long-term solutions to diversify and reduce counterparty risk for its mining unit. Galaxy recently began construction on its first proprietary mining facility in Texas, which is expected to be fully operational by January, according to the company’s third-quarter earnings report.
“Galaxy hopes to be one of the most trusted nodes in the decentralized future,” Ferraro said in the statement. “The acquisition of Helios represents a new phase in our two-year journey in bitcoin mining that increases our operating scale and breadth of solutions, creating sustainable value for the largest decentralized digital asset network and shareholders.”
Read more: Bitcoin Miners’ FTX Contagion Exposure May Amplify Industry Pain
UPDATE (December 28, 08:18 UTC): Adds share price reaction in London in the sixth paragraph.
