Rhodium will continue operations while negotiating loan repayment plans, aiming to restructure and emerge from bankruptcy.
The Taxas-based bitcoin mining company Rhodium Enterprise and its six subsidiaries, Rhodium Encore, Rhodium JV, Rhodium 2.0, Rhodium 10MW, Rhodium 30MW, and Jordan HPC, have filed for Chapter 11 bankruptcy. The latest move follows the company’s inability to repay loans between $50 million and $100 million.
As of this writing, the Bitcoin miner holds assets worth between $100 million and $500 million.
Rhodium Files for Voluntary Bankruptcy
According to court filings, Rhodium has debts of up to $100 million, more than 10% of its combined assets. Therefore, the company has filed for voluntary Chapter 11 bankruptcy, which will allow it to raise funds to repay the loans while it functions.
Rhodium raised $78 million from loans to support its subsidiaries in 2021. Sadly, the Bitcoin mining firm was unable to repay a $54 million debt due last month. Although two debt restructuring proposals were made before the deadline, stakeholders couldn’t reach a unanimous decision. Since then, the miner has taken measures to restabilize, but to no avail.
By filing for voluntary Chapter 11 bankruptcy, Rhodium will have the time to negotiate new debt repayments, which may allow it to raise the funds for debt repayment as it functions.
Chapter 11 bankruptcy is known as “reorganization bankruptcy”. Under Chapter 11 bankruptcy, a debtor still has the power of a trustee and may borrow new funds with court approval. Moreover, the debtor can propose a reorganization, which, when accepted by the creditors, will be confirmed by the court.
Bitcoin Miners Losses
Like Rhodium, many other bitcoin miners have felt the heat of the 2022-2023 bearish market season. Many seized operations after the 2024 bitcoin halving, which reduced mining block rewards from 6.25 BTC to 3.125 BTC per block as miners spent more to gain less.
Bitcoin mining profits have dropped sharply following the just-concluded bitcoin halving in April, throwing many low-level miners out of the game.
On the other hand, a few bitcoin mining firms are sailing through the stormy season as they look forward to an upward movement in bitcoin’s price. Famous miner Marathon Digital has seized the opportunity to hold all of its mined bitcoins. In addition, it has acquired more from the open market and holds over 25,000 BTC.