Bitcoin (BTC) miner Bitfarms has settled its debt obligations to BlockFi, closing the chapter on its short-lived relationship with the bankrupt cryptocurrency lender.
On February 9, Bitfarms disclosed that it had settled its $21 million debt obligations to BlockFi for a one-time cash payment of $7.75 million. The deal came weeks after Bitfarms warned that it could default on its loan to BlockFi.
“Combined with the prior restructuring and the elimination of our capital spending obligations in December, this successful negotiation and agreement furthers our initiatives to reduce debt,” said Jeff Lucas, CFO of Bitfarms.
Bitfarms’ relationship with BlockFi centers around Backbone Mining Company, its wholly owned subsidiary in Washington state. Backbone Mining received a $32 million equipment financing loan from BlockFi in February 2022. As of January 31, 2023, the outstanding principal and interest of the loan amounted to USD 21 million.
#Bitfarms has modified its loan agreement with BlockFi Lending LLC (Blockfi), to settle all outstanding principal and interest due totaling $21 million for a single cash payment of $7.75 million.
Press Release: https://t.co/QBD84U5NwA pic.twitter.com/x9Ahug7Nkp
—Bitfarms (@Bitfarms_io) February 9, 2023
Following the deal, all of Backbone’s assets, including 6,100 miners, are freed from encumbrances.
Cointelegraph reported on Jan. 13 that Bitfarms was seeking to amend its loan agreement with BlockFi in order to obtain “more favorable terms” and reduce Backbone Mining’s obligations. The original loan was secured by Backbone Mining’s assets, including its mining equipment and a percentage of the coins its rigs produced. The assets backing the Backbone Mining loan fell significantly during the bear market.
BlockFi filed for Chapter 11 Bankruptcy on November 28, just weeks after the FTX exchange collapsed. The lender received a $240 million rescue package from FTX US in July 2022, so its fate was apparently tied to the health of Sam Bankman-Fried’s crypto empire.
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