Argo Extends Galaxy Loan after Slashing $7M Debt in Q2

Small-cap bitcoin mining firm Argo Blockchain has extended the maturity date of its loan with Galaxy Digital by six months after reducing the debt by an additional $7 million during the second quarter.

Argo announced that the Galaxy loan has been extended to Dec. 28, 2024. “As of June 30, 2024, the remaining balance of the Galaxy loan is $5.7 million, down from the $35 million initially advanced in December 2022,” the company stated in a release on Monday.

Financial statements from Argo reveal that the debt owed to Galaxy was $12.8 million as of March 31, indicating a reduction of approximately $7.1 million over the past three months.

Argo, one of the first public bitcoin mining firms, has been working on deleveraging its financial position since the 2022 bear market. In December 2022, the company sold its Helios mining site in Texas to Galaxy and secured a $35 million asset-backed loan from Galaxy to repay other loans.

Argo’s 2023 annual report states that the Galaxy loan is secured by Argo’s 23,619 Antminer S19J Pros hosted at the Helios site and certain machines at its data centers in Canada.

The loan term is 18 months, originally maturing in June 2024, with an option to extend for another 18 months if certain financial thresholds are met. The agreement stipulates an interest rate equal to the secured overnight financing rate (SOFR) plus 11%, with a 1.5% renewal fee if the maturity is extended.

Argo did not specify how it raised the proceeds to reduce the debt in Q2. Its fleet and corporate hashcosts amounted to $74/PH/s in Q1, based on TheEnergyMag’s analysis. However, bitcoin’s hashprice mostly remained under $60/PH/s following the halving event in late April.

In July 2023 and January 2024, Argo issued a total of 95.5 million new ordinary shares to institutional investors in the UK, raising $17.4 million for corporate purposes and to repay part of the Galaxy loan.

Argo anticipates that the prepayment will reduce the monthly interest expense on the Galaxy loan to $78,000 in July 2024. According to its Q1 financial report, Argo’s total debt was $54 million.