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Bitcoin Miner Rhodium Files for Bankruptcy Protection

The troubled Bitcoin mining firm revealed in a document filed with a Texas court that it had a liability of about $100 million.

Crypto mining

Bitcoin mining company Rhodium has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court in the Southern District of Texas.

Rhodium’s filing, submitted to the court on August 24, included six subsidiaries, including Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. The document also stated that the troubled Bitcoin miner has a debt between $50 million and $100 million.

Rhodium Files for Bankruptcy

Rhodium raised $78 million in loans in 2021 to finance the operations of its subsidiaries and upscale its mining capacity. The loans were set to mature on July 30th, 2024. Fast-forward to the present, and the Bitcoin mining firm failed to repay its loans, citing financial distress.

In August 2023, the troubled Bitcoin miner revealed its inability to repay the $54 million loan, which was due by July 2024. The company’s team offered two debt restructuring proposals, which stakeholders rejected.

According to TheMinerMag’s report, Rhodium lenders and shareholders argued that the Bitcoin miner’s team “mismanaged the company during the bear market, despite its competitive power costs, leading to its current financial distress.” Recall that Rhodium was operational during the 2022 bear market that plunged Bitcoin’s price to a depth of $16,700.

The Bitcoin mining company has chosen the law firm Quinn Emanuel Urquhart & Sullivan as its general bankruptcy counsel and Province as its restructuring adviser.

Will Rhodium Recover from Bankruptcy?

It is currently uncertain whether Rhodium will recover from its bankruptcy. The company’s court filing reveals total assets between $100 million and $500 million.

A factor that may tighten Rhodium’s chances of recovering the loan amount is the reduction of the BTC mining reward, which was halved from 6.25 BTC to 3.125 BTC in April. Although this process helps to boost Bitcoin’s price in the long run, it reduces the revenue miners generate daily.

On the bright side, other Bitcoin miners like Core Scientific, which once faced bankruptcy, have recovered. This news implies that Rhodium has a fighting chance.

Mishael Nwani

Mishael Nwani is an avid crypto enthusiast with nearly four years of experience in the industry. Since 2022, he has covered topics across cryptocurrencies, NFTs, artificial intelligence, and financial markets.