Bitcoin Miner Argo Blockchain Will Avoid Bankruptcy With $100M Bailout From Novogratz’s Galaxy Digital

Galaxy will buy Argo's Helios facility for $65 million and provide $35 million loan to help the miner amid restructuring.

AccessTimeIconDec 28, 2022 at 7:00 a.m. UTC
Updated May 9, 2023 at 4:05 a.m. UTC

Bitcoin miner Argo Blockchain (ARBK) will avoid filing for bankruptcy protection after it agreed to sell its Helios mining facility in Dickens Country, Texas, to Galaxy Digital for $65 million.

The miner will also get a new $35 million loan from noted investor Michael Novogratz’s crypto-focused financial-services firm, which will be secured by Argo's mining equipment, according to a statement sent to CoinDesk.

"Over the last few months, we have been looking for a way to continue mining through the bear market, reduce our debt load and maintain access to the unique power grid in Texas," Argo CEO Peter Wall told CoinDesk. "This deal with Galaxy achieves all of these goals, and it lets us live to fight another day."

The transaction will help Argo bolster its balance sheet and avoid bankruptcy after it found itself in a precarious situation when a deal for $27 million in funding fell through in October. Earlier this month, the miner said that it was in advanced negotiations to sell some of its assets and carry out an equipment financing transaction to avoid filing for Chapter 11 bankruptcy.

The deal with Galaxy was structured to boost Argo's balance sheet and capital structure, Chris Ferraro, president and chief investment officer at Galaxy, told CoinDesk. When the miner kicked off its process, "we were in a position to solve the problem completely for Argo, while accelerating the expansion of our own mining capabilities,” he added.

The crypto miner's shares more than doubled in early London Stock Exchange trading. On Tuesday, the company requested a 24-hour suspension of trading in its Nasdaq-listed stock, while the London market was closed for a U.K. bank holiday.

Argo is among several miners that are struggling to stay afloat amid rising energy costs low bitcoin (BTC) prices.

Earlier this month, Core Scientific (CORZ), one of the largest miners by computing power, filed for bankruptcy, and in September, Compute North, another major firm in the sector, filed for Chapter 11 bankruptcy protection. Last week, bitcoin miner Greenidge said that it reached a debt restructuring deal with its lender Nydig, although the prospects of a bankruptcy filing still loom.

Texas-sized center

Helios, which was Argo's largest mining facility, has up to 180 megawatts worth of power capacity and will become Galaxy's flagship mining operation. The facility started operations in May under Argo, with a plan to reach 800 megawatts of energy consumption and 20 exahash/second of computing power. If expanded to its full capacity, it could make Galaxy one of the world's largest bitcoin miners.

"Quality infrastructure and access to low-cost energy are the cornerstones of a successful mining operation, making the acquisition of Helios an incredible milestone for the growth of Galaxy’s mining business," Amanda Fabiano, head of mining at Galaxy, said in a statement.

Additionally, Argo will enter into a two-year hosting agreement with Galaxy, securing a place for Argo’s computers to keep mining at the Helios facility, according to the statement.

Bear market opportunity

The brutal crypto winter, exacerbated by crypto exchange FTX's implosion, has created opportunities for some investors to acquire crypto assets at cheaper valuations.

The transaction will be the second such deal in a month for Galaxy. Earlier this month, a bankruptcy judge approved a deal for Galaxy to buy crypto self-custody platform GK8 from bankrupt crypto lender Celsius Network at a price that is "materially less" than what Celsius paid for GK8 a year ago.

Helios will be the second bitcoin mining facility that Galaxy will own and operate as the firm said it is working on multiple longer-term solutions to diversify and reduce counterparty risk for its mining unit. Galaxy recently started construction on its first proprietary mining site in Texas, which is expected to be fully operational by January, according to its third-quarter earnings report.

“Galaxy is aspiring to be one of the most trusted nodes of the decentralized future,” Ferraro said in the statement. “The acquisition of Helios represents a new stage over our two-year journey in bitcoin mining that increases our operating scale and breadth of solutions, creating sustainable value for the biggest decentralized digital-asset network and shareholders alike."

UPDATE (Dec. 28, 08:18 UTC): Adds share price reaction in London in sixth paragraph.


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Aoyon Ashraf

Aoyon Ashraf is managing editor with more than a decade of experience in covering equity markets