Michael Novogratz’s crypto-focused financial services firm, Galaxy Digital, will purchase Argo’s Helios Bitcoin (BTC) mining facility and provide an additional $35 million loan to assist with restructuring efforts. This was announced in an official press release issued by Argo Blockchain.
$35M Asset-backed Loan
Galaxy will provide Argo with a new asset-backed loan in the amount of $35 million with an initial term of 36 months as part of the agreement.
This financing will be backed by a collateral package that includes mining machines currently in operation at Helios as well as some machines at Argo’s Canadian data centers.
“This transaction with Galaxy is a transformational one for Argo and benefits the Company in several ways,” said Argo CEO Peter Wall.
Offsetting Bills and Remaining Open
Wall added that the deal with Galaxy digital would reduce their debt by $41 million and gives them a healthier balance sheet and increased liquidity, and that would enable them to continue operations even as the market continues to deteriorate.
According to him, it would also enable them to focus on optimizing their operations with significantly lower capex and opex requirements.
Argo stated that the proceeds from the sale of Helios, as well as a portion of the asset-backed loan borrowings, would be used to repay existing debts, prepayment interest, and other fees totaling approximately $84 million owed to NYDIG ABL LLC and $1 million owed to North Mill Commercial Finance.
Following this repayment, the company will receive $6 million from a collateral account controlled by NYDIG ABL LLC.
Mining Machines and Funding Options
For the next two years, Galaxy will house Argo’s 23,619 Bitmain S19J Pro mining machines at Helios. According to the announcement, the companies intend to collaborate on the transition at Helios to minimize disruption to operations.
On the bitcoin mining machines Argo CEO Peter Wall said that the company would maintain ownership of its fleet of Bitcoin mining machines representing approximately 2.5 EH/s total hashrate capacity.
Argo had warned that it may be forced to close after a $27 million share sale appeared to have failed, sending the stock plummeting to its lowest level since its initial public offering in 2018. It stated that it raised approximately $5.6 million by selling nearly 4,000 new Bitmain mining machines and was looking into other funding options.
Peter Wall also exposed Argo’s financial struggles by revealing that if the company failed to secure additional funding it would become “cash flow negative” in the near term and would need to curtail or cease operations. He, however, added that the Galaxy digital deal was keeping their doors open.
Argo is far from the only mining company experiencing difficulties during this crypto winter. Compute North declared bankruptcy in September, and Core Scientific declared bankruptcy just recently.
Image Courtesy of Shutterstock
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