By
Bena Ilyas
April 18th, 2024
Troubled crypto miner Argo is set to sell Helios to Galaxy Digital for a much-needed $65 million as insolvency looms.
Argo Blockchain has reportedly agreed to sell its Helios mining facility to digital asset and blockchain-centric company Galaxy Digital. Argo will sell the Helios mining plant to Galaxy Digital for $65 million as part of its plans to stave off bankruptcy. The embattled Bitcoin (BTC) mining company has been seeking extra capital to avoid filing for bankruptcy. According to reports, Argo Blockchain expects to close its Helios acquisition deal with Galaxy today, December 28th.
Pursuant to the deal, Galaxy will provide Argo with a new asset-backed loan in an aggregate principal amount of $35 million (£29 million). The initial term for the said deal is 36 months, with financing entailing a collateral package that includes 23,619 Helios Bitmain mining machines.
Argo could use the cash proceeds from the Helios sale and some of its assets-backed loan to cover all financial obligations. These include repaying all existing indebtedness, prepayment interest, and other fees amounting to several millions owed to numerous creditors.
Argo Views Helios Sale to Galaxy Digital as Only Recourse to Remain Afloat
In October, Argo warned it might slip into insolvency unless it secured additional capital to remain afloat. This gloomy forecast came after a rescue deal fell through. At the time, Argo explained in a statement to the London Stock Exchange:
“As previously disclosed, the Company signed a non-binding LOI with a strategic investor to raise approximately £24 million ($27 million) via a subscription for ordinary shares. The Company no longer believes that this subscription will be consummated under the previously announced terms. Argo is continuing to explore other financing opportunities.”
In addition, Argo explained:
“While Argo is exploring other financing opportunities, there can be no assurance that any definitive agreements will be signed or that any transactions will be consummated. Should Argo be unsuccessful in completing any further financing, Argo would become cash flow negative in the near term.”
The company concluded that should it fail to secure financing, it would need to curtail or cease operations.
Surging energy costs and falling BTC prices adversely impacted Argo’s bottom line and squeezed its margins. Earlier in the month, the London Stock Exchange temporarily suspended the Bitcoin miner after it accidentally reported bankruptcy. In addition, the Nasdaq also suspended trading again on Tuesday in anticipation of the Argo bankruptcy announcement.
Crypto Credit Crunch
Argo is just one of a growing number of crypto firms close to being hit or already hit with bankruptcy. The Bitcoin-mining industry has been in a tailspin over the past few months and has seen its profit margins taper.
Other players in the industry that have collapsed due to the prevailing crypto market parameters include Core Scientific (NASDAQ: CORZ) and FTX. Furthermore, three months ago, BTC mining hosting company Compute North also filed for Chapter 11 bankruptcy protection.
The price of digital currencies is also trading down significantly compared to the same period last year. For instance, leading crypto Bitcoin is currently changing hands at just over $16K. In November last year, the coin rose to an all-time high of approximately $70K.