Texas Court Receives a Bankruptcy Filing From Bitcoin Miner Rhodium.
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Written by
Yana Levkovich - Updated 2024-08-27 10:29:08
While Rhodium's total assets are believed to be between $100 million and $500 million, its debts are between $50 million and $100 million.
The Bitcoin mining company Rhodium Enterprises disclosed up to $100 million in liabilities when it filed for voluntary bankruptcy in the United States Bankruptcy Court for the Southern District of Texas under Chapter 11.
Six subsidiaries are listed in the petition, which was filed on August 24. They are Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. The company's overall assets are estimated to be between $100 million and $500 million, while its debts are between $50 million and $100 million, according to the paper.
The filing for bankruptcy of Rhodium comes after earlier news of financial difficulties within the corporation. Rhodium Encore and Rhodium 2.0's parent company, Rhodium Enterprises, is said to have defaulted on $54 million in loans to lenders in July. Rhodium raised $78 million in loans for its affiliates in 2021.
There were apparently two suggestions for debt restructuring made before the deadline, but the default was brought on by conflicts among parties. The company will be able to reorganize its obligations while carrying on with business as usual under Chapter 11 voluntary bankruptcy, which will enable it to work out a revised repayment plan.
Similar protection has already been sought by other Bitcoin mining businesses. For example, Core Scientific filed for Chapter 11 in December 2022, citing rising energy bills and declining bitcoin values. The business came out of bankruptcy in the first part of 2024.
One cryptocurrency miner that has been badly impacted by the most recent bear market is rhodium. Competition rival Rio Platforms sued Rhodium Enterprises in 2023 to recoup over $26 million in unpaid fees for using Riot's Whinstone Bitcoin mining facilities.
In addition, a recent JPMorgan analysis claims that the April halving event caused a dramatic fall in Bitcoin miner profits. Profit margins have been strained by the halving of Bitcoin miner awards, and the financial performance of miners has been further strained by rising electricity costs.
