In the past few months, Bitcoin miners have been caught in the dilemma of “weak currency prices squeeze profits” and “high electricity prices increase operating costs”. Many mining companies are struggling. Core Scientific and Compute North have all filed for Bankruptcy protection, while Argo Blockchain temporarily avoided the disaster, and was able to continue its life by injecting $100 million in rescue funds from the cryptocurrency bank Galaxy Digital.
Publicly traded mining company Argo Blockchain announced Wednesday that it has agreed to sell its Texas-based Helios mine to Galaxy Digital for $65 million to avoid bankruptcy.
At the same time, Argo Blockchain will also lend $35 million to Galaxy Digital against the company’s mining equipment as collateral.
The official statement also mentioned that Argo Blockchain will sign a two-year hosting agreement with Galaxy Digital, enabling Argo Blockchain’s mining machines to continue operating in the Helios mine.
Chris Ferraro, president and chief investment officer of Galaxy Digital, pointed out that the transaction is aimed at improving Argo Blokchain’s balance sheet and capital structure. He said, “We can assist Argo Blockchain to completely solve the liquidity problem, while accelerating the expansion of our own mining capacity.”
Due to the impact of rising electricity costs and falling bitcoin prices, Argo Blockchain’s profitability has been severely damaged this year, resulting in a cash shortage for the company. Therefore, it signed a non-binding letter of intent with strategic investors in October this year. An attempt to raise $27 million in a stock offering failed.
In announcing the failed financing, Argo Blockchain stated that if it cannot successfully complete any further financing, the company will experience negative cash flow in the short term and will need to scale back or even cease operations.