Bitcoin Miner Bitfarms Looks to Amend BlockFi Loan, Warns of Default
Bitcoin miner Bitfarms (BITF) is looking to modify a $20 million loan from bankrupt crypto lender BlockFi, the firm said in a press release on Friday.
Bitfarms might have already or may in the future stop making instalment payments, effectively defaulting on the loan, thereby risking that BlockFi exercises its rights the collateral.
The loan for $32 million was signed in February 2022 by Backbone Mining Solutions, a Bitfarms company which operates a 20 megawatt (MW) mining site in Washington state.
The loan now has $20 million outstanding, and is secured by only $5 million in assets, in the form of some mining machines and the bitcoin they produce. So, the miner is looking for more favorable terms on the loan and reducing its obligations.
"Neither a restructuring on more beneficial loan terms nor a reduction in BMS’s indebtedness is assured," the Friday press release said.
Canada-based Bitfarms has been working to reduce its loans, but still has $47 million outstanding, including the loan with BlockFi.
Miners have been haunted by their heavy debt obligations in a bear market that has seen the value of their collateral, usually crypto assets and mining machines, plummet. Some of the biggest firms in the industry, Compute North and Core Scientific (CORZ) have filed for Chapter 11 bankruptcy protection.
As of the end of 2022, Bitfarms had $36 million in cash and unencumbered crypto.
The stock is down over 5% at 95 cents in pre-market trading.