Bankrupt BlockFi to Sell $160M in Bitcoin Mining Hardware Loans: Report
The embattled crypto company has around $160 million in loans backed by 68,000 Bitcoin mining rigs which it needs to sell.
The New Jersey-based firm started the bidding process for the loans last year, according to a Jan. 24 Bloomberg report citing ‘people familiar with the matter.’
They added that some of these loans have already defaulted and are under-collateralized due to the decline in prices of BTC mining hardware.
BlockFi filed for chapter 11 bankruptcy in late November following the collapse of FTX.
BlockFi to Sell Distressed Assets
Crypto lenders such as BlockFi also ventured into Bitcoin mining to bolster their digital asset treasuries. According to Bloomberg, almost $4 billion was raised through these loans since the last crypto bull run.
Other major lenders for crypto-mining companies include New York Digital Investment Group (NYDIG), Celsius Network, Galaxy Digital, and Digital Currency Group’s (DCG) Foundry.
However, 2022 was a terrible year for the crypto-mining industry. BTC miners have been hit with a triple whammy of high hash rates and competition, increasing energy prices, and slumping Bitcoin prices.
There is now a market for such distressed assets from bankrupt crypto lenders and struggling mining firms. Crypto asset manager Grayscale set up a fund with Foundry to invest in BTC mining hardware to capitalize on this distressed asset market.
On Jan. 23, BlockFi urged the court to approve the payment of bonuses as the firm struggles to retain staff. According to the filing, Chief People Officer Megan Crowell said, “despite an incredibly turbulent time in the digital asset industry, the opportunities for participants elsewhere have not dried up.”
She added that the “war for talent remains active,” urging for the approval of a retention program to prevent “unsustainable” pressure on the company.
Crowell’s proposal would offer staff bonuses of 20-50% of their salaries if they remained at the firm as of Jan. 31.
Crypto Market Outlook
Digital assets are back in the green during the Tuesday morning Asian trading session. Total capitalization was up 1.3% on the day to reach $1.09 trillion.
Markets have now recovered 33% since their cycle low of $820 billion in late November.
Bitcoin had made a further 1.7% in a move to $23,139, however, Ethereum was flat on the day, remaining at $1,644. Altcoins performing well at the time of writing included XRP, DOT, AVAX, and LDO.
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