Bitfarms repays $21M loan with $7.75M payment

How does bitcoin mining work?
How does bitcoin mining work?

Mining company Bitfarms has repaid the balance of a $21 million BlockFi loan in a single cash payment of $7.75 million, according to the updated terms of the agreement.

In February 2022, the American subsidiary of Bitfarms, Backbone Mining Solutions (BMS), entered into a $32 million equipment loan agreement with BlockFi. The structure owns and operates a 20 MW mining center in Washington state.

In January 2023, Bitfarms announced that it was seeking better terms for repaying the balance of the loan, which at that time, including interest, was $20 million. BMS valued the ASIC miners pledged at ~$5 million.

Bitfarms said they were ready to default on the loan and stop operations in Washington.

The settlement of the transaction under the new agreements completely removed the encumbrance from the property of BMS, including 6100 bitcoin miners.

β€œCombined with the previous restructuring and liquidation of capital expenditure commitments in December, these successful negotiations and settlements support our debt reduction, liquidity and financial flexibility initiatives in line with current market conditions,” said Bitfarms CFO Jeff Lucas.

According to him, the company has reduced its debt from a maximum of $165 million in June 2022 to $25 million. The collateral for outstanding loans is equipment that is deployed at the Bitfarms facility in Quebec.

Bloomberg reported in January that bankrupt BlockFi was trying to sell about $160 million worth of loans backed by about 68,000 bitcoin miners.

Recall that in June 2022, the total volume of such loans by industry participants was estimated at $4 billion.

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