Bitcoin Miner Bitfarms has settled its debt with BlockFi, ending a short-term relationship with the bankrupt cryptocurrency lender.
On Feb. 9, Bitfarms revealed that it had settled $21 million in debt with BlockFi through a single cash payment of $7.75 million. The settlement comes weeks after Bitfarms warned it could default on its BlockFi loans.
Jeff Lucas, Bitfarms' chief financial officer, said: "Combined with the restructuring we undertook in December and the cancellation of our capital expenditure obligation, this successful negotiation and settlement furthers our efforts to reduce debt." Bitfarms’ relationship with BlockFi revolves around its wholly owned Washington state subsidiary, Backbone Mining Company. Backbone Mining secured a $32 million equipment financing loan from BlockFi in February 2022. As of January 31, 2023, the loan has a total outstanding principal and interest of $21 million.
According to Cointelegraph report: Bitfarms is seeking to amend its loan agreement with BlockFi to obtain "more favorable terms" and reduce Backbone Mining's obligations. The initial loan facility was collateralized by Backbone Mining's assets, including its mining equipment and a percentage of the bitcoins produced by its drilling rigs. The assets securing Backbone Mining's loans fell sharply during the bear market.
BlockFi filed for Chapter 11 bankruptcy protection on Nov. 28, just weeks after cryptocurrency exchange FTX collapsed. The lender received a $240 million bailout from FTX US in July 2022, so its fate appears to be tied to the health of Sam Bankman-Fried’s cryptocurrency empire.
