By
Chimamanda U. Martha
April 25th, 2024
Embattled crypto-centric company BlockFi looks to auction off its mining equipment amid its ongoing bankruptcy case.
Digital asset lending firm BlockFi recently secured bankruptcy court approval to establish an auction for its crypto mining business. According to reports, the company plans to receive bids quickly to take advantage of prevailing market conditions. Furthermore, BlockFi lawyer Francis Petrie explained at a recent video court hearing that the firm had already received some initial bids for various assets. Speaking to US Bankruptcy Judge Michael Kaplan, Petrie said:
“We’ve received substantial interest in the market for bidding purposes and the current volatility in the cryptocurrency market, which means we need to act quickly.”
Petrie also said that BlockFi expects more bids to come.
BlockFi looks to auction off computer equipment for mining digital coins. The crypto mining business is currently on the upswing following the fall in power prices. This positive development also sees another bankrupt crypto platform, Celsius Network, aiming to offload many machines. The New Jersey-based crypto lending platform made a similar BlockFi announcement last week.
Petrie says bids for BlockFi’s mining assets are due on February 20th. In addition, the company’s lawyer also stated that an auction would take place about one week later. Finally, BlockFi could return to court in March for approval of proposed deals that may arise from the auction.
BlockFi Mining Auction Development Follows November Insolvency
BlockFi filed for bankruptcy last November on the heels of the FTX collapse. Following insolvency, the company, which had deeply rooted financial ties with FTX, hoped to sell or reorganize its business. This restructuring was to generate enough funds to repay creditors. Petrie told the court that any assets BlockFi does not put up for auction would be restructured as part of a broader proposal to exit bankruptcy.
At the time of its bankruptcy filing, BlockFi disclosed that it had around $257 million in cash to help itself. However, the embattled firm owed more than 100,000 creditors and had $10 billion in assets and liabilities.
BlockFi’s November bankruptcy filing also revealed that the company owed $30 million to the Securities and Exchange Commission (SEC). It further owed $275 million to West Realm Shires and an additional $729 million to its top creditor, Ankura Trust Company.
At the time of the bankruptcy filing, a financial adviser to BlockFi part-owner Valar Ventures said:
“From inception, BlockFi has worked to positively shape the cryptocurrency industry and advance the sector. BlockFi looks forward to a transparent process that achieves the best outcome for all clients and all other stakeholders.”
BlockFi majorly financed Bitcoin (BTC) miners, which endured severe macroeconomic constraints last year. The firm was a major financier of BTC miners through loans backed by computer rigs. However, Celsius lawyers recently said that Bitcoin mining profitability is on the rise due to the plunge in power costs.
The BlockFi bankruptcy case takes place at the US Bankruptcy Court for the District of New Jersey (Trenton).