Key Takeaways
- Rhodium has received court approval to take a loan in either U.S. dollars or Bitcoin.
- The company was authorized to choose between receiving $30 million or 500 Bitcoin from Galaxy Digital
- Rhodium can repay the Bitcoin loan in U.S. dollars based on the “reasonable published market spot prices” at the time of repayment
Bankrupt Bitcoin Miner Rhodium Enterprises has now received court approval to take a loan in either United States dollars or in Bitcoin.
The company was authorized to choose between receiving $30 million or 500 Bitcoin from blockchain digital firm, Galaxy Digital. The U.S. dollar loan comes with a 14.5% annual interest rate, while the Bitcoin loan offers a lower interest rate of 9.5%.
The bankruptcy filing, made on August 24, covers six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. According to the filing, Rhodium’s debts are estimated between $50 million and $100 million, while its total assets are valued between $100 million and $500 million.
In July, the Bitcoin miner reportedly failed to repay $54 million in loans, leading to increased scrutiny. Previously, Rhodium raised $78 million in loans in 2021 to support the operations of its subsidiaries, including Rhodium Encore and Rhodium 2.0.
The fluctuations in Bitcoin’s price make it difficult to predict the total amount of loan payments, regardless of the interest rate. As shown in recent data, Bitcoin prices have dropped nearly 11% in the last month, adding to the uncertainty. Rhodium also has the flexibility to repay the Bitcoin loan in U.S. dollars based on the “reasonable published market spot prices” at the time of repayment, prior to the due date.
Rhodium’s bankruptcy filing follows a trend seen in other Bitcoin mining firms that have sought similar protection due to falling cryptocurrency prices and rising operational costs. Core Scientific, another Bitcoin mining company, filed for Chapter 11 in December 2022 but emerged from bankruptcy in early 2024.
Rhodium is among several crypto miners impacted by the last bear market. In 2023, competitor Riot Platforms filed a lawsuit against Rhodium to recover over $26 million in unpaid fees related to the use of Riot’s Whinstone Bitcoin mining facilities. Additionally, a recent JPMorgan report indicated that Bitcoin miner profits have significantly declined due to the halving event in April, which reduced Bitcoin mining rewards and squeezed profit margins.
The next halving event is currently expected to occur in April 2028. The overall process of halving is set to continue until around the year 2140. At that point, all 21 million bitcoin are expected to be mined.
