bullish

Rescue

Galaxy

Bitcoin

Bold

Rhodium Enterprises, a Bitcoin mining firm that filed for Chapter 11 bankruptcy a few days ago, has received legal approval for a loan. The court says Rhodium can obtain the loan in U.S. dollars cash or in Bitcoin.<a href="https://www.bloomberg.com/news/articles/2024-08-30/rhodium-gets-approval-for-rare-bitcoin-based-bankruptcy-loan?ref=biztoc.com" rel="noopener noreferrer nofollow"> According to the report</a>, the loan terms involve choosing between $30 million and 500 BTC.
<h2 id="b-galaxy-digital-to-finance-crypto-based-loan-b">Galaxy Digital To Finance Crypto-Based Loan</h2>
Notably, the 500 Bitcoin loan will come from<a href="https://thecoinrise.com/galaxy-digital-raises-113m-for-its-new-crypto-venture-fund/" rel="noopener noreferrer nofollow"> Mike Novogratz’s Galaxy Digital</a> at an interest rate of 9.5%. The $30 million loan in fiat will come at a higher interest rate of 14.5%. A significant condition of the Bitcoin loan includes a repayment option in U.S. dollars if the lender approves. However, the rate will be based on “published market spot prices” at repayment time.
Industry players have described this financing model as rare, particularly in crypto. A major factor is the volatility that characterizes the crypto market. For instance, <a href="https://coinmarketcap.com/currencies/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin trades</a> at $59,024.94 and has dipped by over 10% in the past month due to broad bearish sentiment.
<h2 id="b-is-bitcoin-a-strategic-option-amidst-market-uncertainty-b">Is Bitcoin a Strategic Option Amidst Market Uncertainty?</h2>
However, the crypto market could also experience bullish growth, and a corresponding 10% increase will see BTC trading at approximately $65,000. If this happens at the time of repayment, Rhodium may struggle to meet its financial obligations to the lender.
As of this writing, Rhodium has yet to clarify whether the loan will be in Bitcoin exclusively or a mixture of cash and BTC. In any case, the court’s green light provides the mining firm with options. A significant part of voluntarily filing for Chapter 11 bankruptcy means that Rhodium can restructure its debts while it stays in operation.
<h2 id="b-challenges-in-the-bitcoin-mining-sector-b">Challenges in the Bitcoin Mining Sector</h2>
Rhodium’s bankruptcy filing comes amid financial pressure in the Bitcoin mining sector. Ever since the Bitcoin halving event in April, miners’ rewards have been reduced. Additionally, rising energy costs, worries<a href="https://thecoinrise.com/riot-has-sued-btc-miner-rhodium-seeks-to-claw-26m-in-dues/" rel="noopener noreferrer nofollow"> over increasing debt, and mismanagement</a> have plagued some miners, including Rhodium.
This reality has led to sell-offs and acquisitions in recent times. For instance,<a href="https://thecoinrise.com/bitfarms-to-acquire-stronghold-digital-for-175m-in-stock-and-debt/" rel="noopener noreferrer nofollow"> Bitfarm recently acquired Stronghold Digital Mining</a> for over $120 million, with about $50 million in debt liability. However, Bitfarm looks to increase its energy capacity by more than 300 megawatts with the acquisition.
The post <a href="https://thecoinrise.com/bankruptcy-court-greenlights-rhodium-bold-bitcoin-rescue-plan/" rel="noopener noreferrer nofollow">Bankruptcy Court Greenlights Rhodium’s Bold Bitcoin Rescue Plan</a> appeared first on <a href="https://thecoinrise.com" rel="noopener noreferrer nofollow">TheCoinrise.com</a>.

Bankruptcy Court Greenlights Rhodium’s Bold Bitcoin Rescue Plan

Table of Contents

TheCoinrise Media

Other articles published on Aug 31, 2024

Coinbase CEO Announces First AI-Managed Crypto Transaction

Meme Coins Set to Soar: Dogecoin, Shiba Inu, PEPE, BONK, and FLOKI on the Rise

Major Token Unlocks for Next Week Include SUI, IMX, DYDX, and These Top Altcoins

Pantera’s $1B Crypto Fund: A Solana-Focused Bet?

Solana Holders Eyeing 100x Player Raboo, As Rumours Float About Foul Play With XRP?

Vitalik Buterin Reduces His Holding By 26.15% Over The Past 3 Years!

Join our free newsletter for daily crypto updates!