Bitfarms repays a $21m BlockFi loan with a $7.75m cash payment

The mining company Bitfarms repaid the remaining BlockFi loan totaling $21 million with a single cash payment of $7.75 million, under updated terms of the agreement.

#Bitfarms has modified its loan agreement with BlockFi Lending LLC (Blockfi), to settle all outstanding principal and interest due totaling $21 million for a single cash payment of $7.75 million.

🔗 Press Release: https://t.co/QBD84U5NwA pic.twitter.com/x9Ahug7Nkp

— Bitfarms (@Bitfarms_io) February 9, 2023

In February 2022, Bitfarms’ U.S. subsidiary — Backbone Mining Solutions (BMS) — entered into a loan agreement with BlockFi secured by equipment for $32 million. The entity owns and operates a 20 MW-capacity mining center in the state of Washington.

In January 2023, Bitfarms announced that it is seeking more favourable terms for the repayment of the remaining loan, which at that time, together with interest, amounted to $20 million. The value of the ASIC miners pledged in the BMS was estimated at around $5 million.

Bitfarms stated that it was prepared to default on the loan and suspend operations in Washington.

The settlement of the deal under the new terms fully removed encumbrances on BMS assets, including 6,100 Bitcoin miners.

“In combination with the previous restructuring and the winding down of capital expenditure obligations in December, these successful negotiations and the settlement contribute to our efforts to reduce debt, increase liquidity and improve financial flexibility in line with current market conditions,” commented Bitfarms CFO Jeff Lucas.

According to him, the company reduced its debt from a peak of $165 million in June 2022 to $25 million. The collateral for the outstanding loans is the equipment deployed at Bitfarms’ facility in Quebec.

Bloomberg in January reported that BlockFi’s ongoing bankruptcy proceedings are attempting to sell loans secured by about 68,000 Bitcoin miners, totaling around $160 million.

As noted in June 2022, the total value of such industry loans was estimated at $4 billion.