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Bitcoin mining firm Rhodium Enterprises, which recently filed for bankruptcy, has reportedly received court approval to take a loan in either United States dollars or in Bitcoin.&nbsp;
The company was authorized to choose between receiving $30 million or 500 Bitcoin (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bitcoin-price" rel="null" target="null" text="null">BTC</a>) from Galaxy Digital, a blockchain firm led by Mike Novogratz. However, the United States dollar loan would have a 14.5% annual interest while the interest rate on the Bitcoin loan is cheaper at 9.5%, <a data-ct-non-breakable="null" href="https://www.bloomberg.com/news/articles/2024-08-30/rhodium-gets-approval-for-rare-bitcoin-based-bankruptcy-loan?sref=IIP4JEyu" rel="nofollow noopener" target="_blank" text="null">according</a> to a Bloomberg report.&nbsp;
With the lender’s approval, Rhodium could repay the Bitcoin loan in US dollars based on the “reasonable published market spot prices” at the time of repayment prior to the due date.
<h2 id="strong-unusual-strategy-for-bankruptcy-funding-strong">Unusual strategy for bankruptcy funding</h2>
The approval is unusual for bankruptcy financing in the crypto sector due to Bitcoin’s price volatility, which makes it challenging to predict the total amount of loan payments, regardless of the interest rate. As shown in the chart below, Bitcoin prices are down nearly 11% in the last month, <a data-ct-non-breakable="null" href="https://coinmarketcap.com/currencies/bitcoin/" rel="nofollow noopener" target="_blank" text="null">according</a> to CoinMarketCap data.&nbsp;
 
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 <img alt="Bankrupt Bitcoin miner Rhodium gets court approval for loan in BTC or USD" name="" src="https://s3.cointelegraph.com/uploads/2024-08/0191a76b-ea0f-7c8b-ab85-c6fc332d2c05">
 <figcaption style="text-align: center;">
 Source: CoinMarketCap
 </figcaption>
</figure>
On Aug. 24, Rhodium Enterprises <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bitcoin-miner-rhodium-files-bankruptcy-texas" rel="null" target="null" text="null">filed for voluntary bankruptcy</a> under Chapter 11 in the US Bankruptcy Court for the Southern District of Texas, disclosing liabilities of up to $100 million.
The filing included six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW and Rhodium 30MW. According to the document, the company’s debts range between $50 million and $100 million, while its total assets are valued between $100 million and $500 million.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/thai-authorities-raid-illegal-bitcoin-mine-power-outages" rel="null" target="null" text="null">Thai authorities raid illegal Bitcoin mine behind local power outages</a>
By voluntarily filing for Chapter 11 bankruptcy, the company can reorganize its debts while continuing to operate. This allows it to negotiate a revised repayment plan under new terms.
<h2 id="strong-mining-firms-under-financial-pressure-strong">Mining firms under financial pressure&nbsp;</h2>
Bitcoin mining firms have <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/stronghold-and-bitfarms-under-pressure-after-crypto-stocks-fell-last-month" rel="" target="_self" text="null">been facing significant pressure</a> due to reduced mining rewards following the <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/public-miners-raised-2-2-b-cash-flow-crunch-intensifies-post-halving" rel="null" target="null" text="null">Bitcoin halving</a> in April. Additionally, concerns have arisen over their mounting debt and previous mismanagement.
“Cash-rich miners like [Riot Platforms] and [Cleanspark] acquired other miners with turn-key facilities to increase near-term hashrate and increase their power pipeline,” said <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bitcoin-miner-profits-drop-halving-power-costs-weigh-on-performance-jp-morgan" rel="" target="_self" text="null">JPMorgan in a recent report</a>.&nbsp;
Capital-constrained miners like Iren and Cipher focused on securing greenfield opportunities, which require less immediate capital, the report added.
On Aug. 21, Bitcoin mining firm <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/bitfarms-acquisition-of-stronghold-digital-mining" rel="null" target="null" text="null">Bitfarms announced its acquisition</a> of Stronghold Digital Mining for about $125 million, which also takes into account assumed debt of about $50 million.
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/bitcoin-mining-crackdown-epicenters-nft-phishing-scam-asia-express/" rel="null" target="null" text="null">Bitcoin miners steamrolled after electricity thefts, exchange ‘closure’ scam</a>

Bankrupt Bitcoin miner Rhodium gets court approval for loan in BTC or USD

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