Bitcoin miner Argo will avoid bankruptcy with $100 million bailout of Novogratz’ Galaxy

Bitcoin miner Argo Blockchain (ARBK) will avoid filing for bankruptcy protection after agreeing to sell its Helios mining facility in Dickens Country, Texas to Galaxy Digital (GLXY) for $65 million.

The miner will also receive a new $35 million loan from Mike Novogratz’ crypto-focused financial services firm, backed by Argos mining equipment, according to a statement sent to CoinDesk.

“For the past few months, we’ve been looking for a way to continue mining through the bear market, reduce our debt burden and maintain access to Texas’ unique power grid,” Argo CEO Peter Wall told CoinDesk. “This deal with Galaxy achieves all of those goals and lets us live to fight another day,” he added.

The transaction will help Argo strengthen its balance sheet and avoid bankruptcy after it found itself in a precarious position when a $27 million financing deal failed in October. Earlier this month, the miner said it was in advanced negotiations to sell some of its assets and complete a transaction to fund the equipment to avoid a Chapter 11 bankruptcy filing.

The deal is structured to improve Argo’s balance sheet and capital structure, Chris Ferraro, Galaxy’s president and chief investment officer, told CoinDesk. When the miner started its process, “we were able to fully resolve the issue for Argo while accelerating the expansion of our own mining capabilities,” he added.

The crypto miner, whose shares trade on the London Stock Exchange (ARB) and Nasdaq (ARBK), said Tuesday that it had requested a 24-hour suspension of U.S. trading. The London Stock Exchange was already closed for a UK bank holiday.

Argo is among several miners struggling to stay afloat as rising energy prices drive up costs while stubbornly low bitcoin prices eat away at revenue. This month, Core Scientific (CORZ), one of the largest miners by computing power, filed for bankruptcy, while Compute North, another big player in the industry, filed for Chapter 11 bankruptcy protection in late September. Bitcoin miner Greenidge also said it has reached a debt restructuring agreement with its lender NYDIG, although there are still chances of bankruptcy for the company.

One of the biggest miners

Helios, Argo’s largest mining facility, will have up to 180 megawatts (MW) of power capacity and will become Galaxy’s flagship mining operation. The facility was commissioned under Argo in May, with a plan to achieve 800 megawatts (MW) of power consumption and 20 exahashes/second (EH/s) of processing power. If expanded to its full capacity, it could make Galaxy one of the 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 in the growth of Galaxy’s mining business,” said Amanda Fabiano, Galaxy’s Head of Mining, in the statement.

In addition, Argo will enter into a two-year hosting agreement with Galaxy to secure a place for Argo’s computers to continue mining at the Helios facility, the statement said.

Bear Market Opportunity

The brutal crypto winter, exacerbated by the implosion of crypto exchange FTX, has not only inflicted pain on the industry but also created opportunities for some investors to acquire some crypto assets at much cheaper valuations.

Continue reading: Goldman Sachs Spends “Tens of Millions” on Discounted Crypto Investing After FTX Implosion: Report

The transaction will be Galaxy’s second such deal in a month. On Dec. 13, Galaxy bought crypto self-custody platform GK8 from bankrupt crypto lender Celsius at a price “substantially lower” than what Celsius paid a year ago.

Helios will be the second planned bitcoin mining facility Galaxy will own and operate as the company says it is actively working on several longer-term solutions to diversify and reduce counterparty risk for its mining unit. Galaxy recently began construction of its first owned mining site in Texas, which is expected to be fully operational by January 2023, according to its third-quarter earnings report.

“Galaxy aspires to become one of the most trusted nodes of the decentralized future,” Ferraro said in the statement. “The acquisition of Helios represents a new stage in our two-year Bitcoin mining journey, increasing our scale of operations and breadth of solutions, and creating sustainable value for the largest decentralized digital asset network and shareholders alike,” he added added.

Continue reading: Bitcoin miners’ FTX contagion exposure may add to industry pain