Galaxy

Bitcoin

<ul>
 <li>Rhodium Encore has received court approval to pursue a loan from Galaxy Digital.</li>
 <li>Galaxy Digital offers a 14.5% interest rate for a USD loan or a 9.5% rate for a BTC loan.</li>
</ul>
<a href="https://www.veritaglobal.net/rhodium" target="_blank" rel="noopener noreferrer nofollow">Rhodium Encore LLC</a>, a Bitcoin mining firm based in Texas, has received court approval to pursue a financing plan during its Chapter 11 bankruptcy proceedings. The firm faces a debt of $100M. On Friday, the company was granted permission to choose between receiving $30 million in U.S. dollars or 500 BTC as a loan from Galaxy Digital, a blockchain firm owned by Mike Novogratz.
The dollar loan offered by <a href="https://www.galaxy.com/team/michael-novogratz/#:~:text=Michael%20Novogratz%20is%20the%20Founder,of%20Fortress%20Investment%20Group%20LLC." target="_blank" rel="noopener noreferrer nofollow">Galaxy Digital</a> comes with an <a href="https://www.binance.com/en/square/post/2024-08-31-rhodium-enterprises-receives-court-approval-for-bitcoin-or-dollar-loan-amid-bankruptcy-12903139257018" target="_blank" rel="noopener noreferrer nofollow">interest rate</a> of 14.5% per year, while the BTC loan has a slightly lower interest rate of 9.5%. If Rhodium chooses the BTC loan, they can repay it in U.S. dollars at the time of repayment. It is based on “reasonable published market spot prices,” having the lender’s consent.
The volatility of BTC’s price makes it challenging to predict the total repayment amount, adding an element of risk to the financing strategy. Despite this, Rhodium has been allowed to pursue this option.
Rhodium Encore <a href="https://veritaglobal.net/rhodium/document/2490448240829000000000003" target="_blank" rel="noopener noreferrer nofollow">filed</a> for bankruptcy in August 2024, citing financial struggles with Whinstone US, Inc. The company’s co-chief restructuring officer, David Dunn, stated that these difficulties contributed to Rhodium’s financial distress.
<h3 class="wp-block-heading" id="h-rhodium-s-btc-loan-shows-changing-dynamics-in-bankruptcy-nbsp">Rhodium’s BTC Loan Shows Changing Dynamics in Bankruptcy&nbsp;</h3>
The use of cryptocurrency in <a href="https://thenewscrypto.com/bittrex-files-for-chapter-11-bankruptcy-after-sec-legal-battle/" target="_blank" rel="noopener noreferrer nofollow">Chapter 11 bankruptcy</a> proceedings remains uncommon, even though several crypto firms have gone bankrupt in recent years.&nbsp;
The volatility of BTC is a major drawback, as it can lead to unpredictable repayment amounts. However, some firms, like Bittrex Inc., have also sought BTC funding to manage their financial issues.
Moreover, Rhodium’s decision to file for <a href="https://thenewscrypto.com/genesis-trading-sells-off-600-bitcoins-amid-bankruptcy-proceedings/" target="_blank" rel="noopener noreferrer nofollow">bankruptcy</a> and opt for a cryptocurrency-based loan represents a significant moment in the evolving relationship between traditional finance and the digital asset world.
Further, as the crypto industry continues to grow, more firms may explore similar strategies, <a href="https://thenewscrypto.com/why-is-bitcoin-facing-challenges-to-surpass-62k/" target="_blank" rel="noopener noreferrer nofollow">challenging</a> traditional financial processes and introducing new risks and opportunities in them.
Highlighted Crypto News Today: <a href="https://thenewscrypto.com/discord-hacks-hit-major-platforms-like-orderly-and-witness-chain/" target="_blank" rel="noopener noreferrer nofollow">Discord Hacks Hit Major Platforms Like Orderly and Witness Chain</a>

Rhodium Approved for $30M or 500 BTC Loan Amid Bankruptcy

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