Novogratz's Galaxy Digital Invests $100 Million to Prevent Argo Bitcoin Miner Firm Bankruptcy
Bitcoin (BTC) miner Argo Blockchain said it would sell its Helios mining facility to US-based crypto financial services firm Galaxy Digital for $65 million.
In a press release published on Wednesday, Argo Blockchain said it entered into definitive agreements with Galaxy Digital Holdings, whose founder is the popular billionaire investor Mike Novogratz, under which an Argo subsidiary will sell its Helios facility in Dickens County, Texas, USA, for $65 million. The transactions were set to close on December 28.
As a part of the deal, Galaxy will give Argo a new asset-backed loan in an aggregate principal amount of $35 million with an initial term of 36 months. This particular financing, said the company, will be secured by a collateral package that includes mining machines currently operating at Helios, as well as some machines located at Argo’s Canadian data centers.
Peter Wall, Argo’s Chief Executive, said that,
"This transaction with Galaxy is a transformational one for Argo and benefits the Company in several ways. It reduces our debt by $41 million (£34 million) and provides us with a stronger balance sheet and enhanced liquidity to help ensure continued operations through the ongoing bear market. It also allows us to focus on optimizing our operations with significantly lower capex [capital expenditures] and opex [operating expenses] requirements."
Argo said it would use the cash proceeds from the sale of Helios, as well as a portion of the borrowings under the asset-backed loan, to repay existing indebtedness, prepayment interest, and other fees of approximately $84 million owed to NYDIG ABL LLC and $1 million to North Mill Commercial Finance. Some $6 million will be returned to the company upon this repayment from a collateral account controlled by NYDIG ABL LLC.
Galaxy to host 23,600 machines
Galaxy will host Argo’s 23,619 Bitmain S19J Pro mining machines located at Helios for two years. The companies plan on working together on the transition at Helios in order to minimize disruption to operations, said the announcement.
Wall said that,
"Argo will maintain ownership of its fleet of Bitcoin mining machines, which represents approximately 2.5 EH/s of total hashrate capacity. Our miners currently operating at Helios will continue to be hosted there by Galaxy, which is a high-quality, institutional participant in the Bitcoin mining space."
Galaxy, the owner of Helios, plans to enter into a fixed-price power purchase agreement (PPA) with a licensed retail electricity provider to procure electricity for the facility, said the announcement, while Argo will have access to this electricity at the PPA rate.
"Argo will pay Galaxy a hosting fee and will collaborate on designing a curtailment strategy in order to participate in certain demand response programs offered by the Electric Reliability Council of Texas, which manages the Texas power grid," it added.
Meanwhile, as mentioned, the agreement includes certain mining machines located in Canada. The press release stated that, Argo's Canadian assets are not affected by the deal made with Galaxy "except for the use of some mining machines and other assets located in Quebec as collateral for the asset-backed loan."
It added that,
"Initially, Argo plans to refocus its efforts on growing and optimizing operations at its two data centers in Quebec, which are powered fully by low-cost hydroelectricity."
All this said, and given the newly made deal with Galaxy, Argo said that it would not report earnings results for the third quarter of this year.
As reported, in October Argo warned that it could be forced to shut down after a $27 million share sale appeared to have collapsed, sending the stock plummeting the most since its 2018 initial public offering. It said that it raised about $5.6 million by selling almost 4,000 new Bitmain mining machines and was exploring other funding avenues.
“Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term and would need to curtail or cease operations,” the miner was quoted as saying at the time - but this deal with Galaxy has helped the company keep its doors open.
And Argo is far from the only mining company struggling during this crypto winter. Compute North filed for bankruptcy in September, and Core Scientific did the same just recently.
You can watch the full video of Peter Wall commenting on the Helios sale here:
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Learn more:
- One of the Largest Bitcoin Mining Firms Just Filed For Bankruptcy – Here’s What it Means for the Crypto Industry
- Bitcoin Miner Firm Core Scientific Posts $400 Million Quarterly Loss – Bankruptcy Soon?
- Nvidia Chipmaker Crypto-Related Revenue Beat Expectations Despite Bear Market
- Crypto Mining Investments in Cuba Have Been Severely Impacted by Constant Power Blackouts
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