Galaxy Offers $30M Cash or Bitcoin Loans to Bankrupt Miner Rhodium

Rhodium Enterprises, a distressed bitcoin mining operation, has received court approval to obtain a loan of up to $30 million in cash or 500 Bitcoin (BTC) from Galaxy Digital.

The company filed for Chapter 11 bankruptcy protection for several of its subsidiaries on August 25th and sought debtor-in-possession (DIP) financing.  A Texas bankruptcy court granted this request on Friday.

The DIP loan carries an interest rate of 14.5% for the cash amount or 9.5% if Rhodium opts for a bitcoin loan, a relatively novel approach in bankruptcy proceedings.

The loan matures 12 months after the initial Chapter 11 filing but can be accelerated if certain events occur, including the sale of substantially all of Rhodium’s equity or its Temple site.

The DIP facility also includes financial covenants, such as a minimum liquidity requirement of $5 million in cash or Bitcoin. Rhodium is obligated to maintain at least 19,000 Bitcoin miners operational at all times, unless “power in the surrounding area is generally affected.”

This DIP financing indicates Galaxy Digital’s potential interest in acquiring distressed assets to expand its bitcoin mining capacity.

As of June 30th, the crypto asset manager already manages 5.6 EH/s of hashrate for proprietary mining and hosting. Its proprietary mining segment generated 373 BTC in Q1 and 242 BTC in Q2 of this year.