Bitfarms Settles Debt with BlockFi
Zach Anderson Feb 12, 2023 06:29
Bitfarms and BlockFi collaborate via Backbone Mining Company, a completely owned subsidiary.
Bitfarms, a company that mines for Bitcoin (BTC), has fulfilled its financial obligations to BlockFi, putting an end to the short-lived commercial agreement that it had with the now-defunct cryptocurrency lender.
Bitfarms said on February 9 that it has completed its debt obligations to BlockFi in the sum of $21 million in return for a single cash payment of $7.75 million. This news came shortly after Bitfarms received the cash payment. After Bitfarms issued a warning that it may default on the loan it had taken out with BlockFi, the deal was struck some weeks after the warning was given.
According to statements made by Bitfarms' chief financial officer, Jeff Lucas, this fruitful discussion and settlement moves our efforts to decrease indebtedness one step closer to completion. This successful negotiation and settlement helps advance our goals, especially when considered in conjunction with the prior reorganization and the termination of our obligations regarding capital expenditures in December.
Backbone Mining Company, which is located in the state of Washington and is a wholly owned subsidiary of Bitfarms, serves as the pivotal point of connection between the two companies, Bitfarms and BlockFi. Backbone Mining received a loan from BlockFi in the amount of 32 million dollars in February 2022 for the purpose of supporting equipment purchases. On the 31st of January in the year 2023, the entire amount of the loan's principal and interest that was still due amounted to $21 million.
As a consequence of the settlement, all of Backbone's assets, which currently comprise 6,100 miners, are free and clear of any liens or encumbrances that may have been attached to them before.
BlockFi submitted its petition to file for bankruptcy under Chapter 11 on November 28, just a few short weeks after the fall of the cryptocurrency exchange FTX. The fate of the lender seemed to be tied on the success of Sam Bankman-crypto Fried's business in July 2022, when FTX US provided it with a rescue package for 240 million dollars.
Image source: Shutterstock