Bitcoin Miner Rhodium Files for Bankruptcy with Debts Up to $100 Million

Mining company Rhodium Enterprises has filed a bankruptcy petition under Chapter 11 of the U.S. Bankruptcy Code.

The filing in a Texas court also includes six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW.

According to the document, the firm’s debts range from $50 million to $100 million, with total assets estimated between $100 million and $500 million.

The bankruptcy follows reports from TheMinerMag about the company’s financial difficulties. In 2021, it raised $78 million in debt financing to develop two liquid-cooled bitcoin mining projects — Project Encore (25 MW) and Project 2.0 (35 MW).

In August 2023, the firm’s management indicated that a $54 million loan due on July 30, 2024, would not be repaid on time.

Before the deadline, Rhodium made two debt restructuring proposals, but “some stakeholders disagreed with the plans,” leading the company to declare default.

In 2021, Rhodium ranked fifth in cryptocurrency mining volume among public miners, following Core Scientific, Marathon, Riot, and Bitfarms, with a total of 2847 BTC. In 2022, the company mined 3576 BTC.

The firm planned an IPO, aiming to raise $100 million. Trading was expected to begin on January 20, 2022, with a market valuation of up to $1.7 billion. Management withdrew the plan at the last moment for unknown reasons.

Officially, the IPO application was withdrawn ten months later, following an agreement to go public through a reverse merger with a SPAC named SilverSun. However, the parties abandoned the deal in November 2023.

According to TheMinerMag, investors believe Rhodium’s financial troubles are due to poor management during the bear market, despite access to competitively priced electricity. In IPO documents, the company reported an average rate of $0.022 per kWh and a bitcoin mining cost of $10,783 and $20,614 in 2021 and 2022, respectively.

As of December 31, 2022, Rhodium had 47,100 ASIC miners. Most of the equipment, with a hash rate of 2.7 EH/s, was located at the Whinstone site — a Riot subsidiary in Rockdale. Installations with 1.1 EH/s were deployed at its own Temple facility.

In May 2023, Riot filed a lawsuit to recover more than $26 million from Rhodium. The latter allegedly breached a contract by failing to pay for hosting and mining operation support services from Whinstone.

In December 2023, Rhodium filed a counterclaim with the American Arbitration Association for damages resulting from contract breaches. In June 2024, the company increased its claims against Riot’s structure to $67 million.

Filing for Chapter 11 bankruptcy allows the company to continue operations and gain protection from liabilities. It provides an opportunity to reorganize the business under court supervision.

Back in December 2022, Core Scientific took a similar path. The firm completed the bankruptcy procedure in January 2024, returning to the Nasdaq listing.