BlockFi, the bankrupt crypto mining lender, seeks to cheekily unload its massive load of debt: a whopping $160 million backed by 68,000 Bitcoin mining rigs which it needs to sell. Last year, the New Jersey-based firm initiated the bidding process citing ‘people familiar with the matter.
It looks like, due to the decline in prices of Bitcoin mining hardware, some BlockFi loans have already gone defaulted and are under-collateralized. Firm filed for Chapter 11 bankruptcy in late November, after FTX went bankrupt.
Taking the ‘Distress’ Out of Distressed Assets
Crypto lenders such as BlockFi have ventured into bitcoin mining to build up their digital asset treasuries. As reported by Bloomberg, during the last crypto bull run more than $4 billion was raised through such loans. NYDIG, Celsius Network, Galaxy Digital, and DCG’s Foundry are other major players in the crypto-mining loan market.
2022 was a challenging year for the crypto-mining world. BTC miners faced a threefold dilemma of soaring hash rates, energy costs, and plunging bitcoin prices. This has resulted in bargains in the form of bankrupt crypto lenders and distressed mining firms. Grayscale and Foundry have tapped into this opportunity by launching a fund to score these markers at a discount. Encouraging continued commitment to its staff, BlockFi urged court on Jan. 23, requesting approval to award bonuses up to 50 percent.