Bitcoin (BTC) mining company Bitfarms has announced plans to change an existing loan agreement with BlockFi – a move the company said would reduce its debt amid the bear market.
On January 13, Bitfarm announced that it is working with creditors to modify a loan agreement for Backbone Mining Solutions, or BMS, which owns and operates Bitfarms’ 20-megawatt mining facility. home in Washington state. BMS received a $32 million equipment loan from Bitcoin lender BlockFi in February 2022. The loan was secured against BMS’s current assets, including its miners and a certain percentage of BTC produced by its mining rigs.
When BMS acquired the loan facility, Bitcoin was trading north of $40,000. The price of the flagship digital asset has since fallen below $20,000, reaching a low of around $15,600 in November, according to data from Cointelegraph Markets Pro and TradingView.
As a result of the bear market, the assets securing the BMS loan have fallen by about $5 million, while the capital and interest expense is about $20 million. .
Bitfarms “expected to seek better terms from BlockFi and may take further steps to reduce BMS’s obligations,” the company said.
Jeff Lucas, Bitfarms chief financial officer, explained further:
“Given today’s challenging market conditions, we are seeking to restructure Washington state’s credit facility to meet more favorable terms and conditions.” the market vision and our business plan.”
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Bitfarms and its subsidiaries hold about $36 million worth of unencumbered crypto assets and about $47 million worth of debt, which includes a $20 million BlockFi loan. In an effort to reduce costs, the company has increased operational efficiency by hiring new miners.
️ Ben Gagnon, Chief Mining Officer: “In December, we installed new miners and installed our cheapest miners.”#BITF #BTC pic.twitter.com/YR5dUtBa54
— Bitfarms (@Bitfarms_io) January 10, 2023
BlockFi is facing its own problems after filing for Chapter 11 bankruptcy in November. The Bitcoin investor closed its doors after the crypto exchange FTX – its savior at the time of the Terra ecosystem – suffered with little warning.
The fall of the FTX drop continues to haunt the market. The former CEO, Sam Bankman-Fried, has eight criminal charges and up to 115 years in prison for his role in defrauding businessmen.