Bitfarms settles outstanding loan with BlockFi for $7.75M

The Toronto-based Bitcoin mining company has reduced its debt by nearly 85% since June 2022.

Bitcoin (BTC) miner Bitfarms has settled its debt obligations with BlockFi, closing the chapter on its short relationship with the bankrupt cryptocurrency lender. 

On Feb. 9, Bitfarms disclosed that it had settled its $21 million debt obligations with BlockFi for a single $7.75 million cash payment. The settlement was reached weeks after Bitfarms warned that it might default on its BlockFi loan.

“Combined with the earlier restructuring and elimination of our capital expenditure obligations in December, this successful negotiation and settlement furthers our initiatives to reduce indebtedness,” said Jeff Lucas, Bitfarms’ chief financial officer.

Bitfarms’ relationship with BlockFi centers around Backbone Mining Company, its wholly owned subsidiary in Washington state. Backbone Mining received a $32 million equipment financing loan from BlockFi in February 2022. By Jan. 31, 2023, the outstanding principal and interest on the loan totaled $21 million.

#Bitfarms has modified its loan agreement with BlockFi Lending LLC (Blockfi), to settle all outstanding principal and interest due totaling $21 million for a single cash payment of $7.75 million.

Press Release: https://t.co/QBD84U5NwA pic.twitter.com/x9Ahug7Nkp

— Bitfarms (@Bitfarms_io) February 9, 2023

Following the settlement, all of Backbone’s assets, including 6,100 miners, are unencumbered.

Cointelegraph reported on Jan. 13 that Bitfarms was seeking to modify its loan agreement with BlockFi to obtain “more favorable terms” and reduce Backbone Mining’s obligations. The original loan facility was secured against Backbone Mining’s assets, including its mining equipment and a percentage of the Bitcoin its rigs produced. The assets securing Backbone Mining’s loan dropped significantly during the bear market.

Related: Blockstream raises $125M to finance expanded Bitcoin mining operations

BlockFi filed for Chapter 11 bankruptcy on Nov. 28, mere weeks after the collapse of crypto exchange FTX. The lender received a $240 million rescue package from FTX US in July 2022, so its fate was seemingly tied to the health of Sam Bankman-Fried’s crypto empire.