Bitcoin (BTC) mining company Bitfarms has unveiled plans to modify an existing loan agreement with BlockFi \u2014 a move the company said would reduce its indebtedness amid the bear market.<\/p>\n
On Jan. 13, Bitfarm disclosed that it is working with creditors to modify a loan agreement for Backbone Mining Solutions, or BMS, which owns and operates Bitfarms\u2019 20-megawatt mining facility in Washington state. BMS received a $32 million equipment financing loan from Bitcoin lender BlockFi in February 2022. The loan was secured against existing BMS assets, including its miners and a certain percentage of BTC produced by its mining rigs. <\/p>\n
When BMS received the loan facility, Bitcoin was trading north of $40,000. The value of the flagship digital asset has since plunged below $20,000, reaching a low of around $15,600 in November, according to data from Cointelegraph Markets Pro and TradingView.<\/p>\n
As a result of the bear market, the assets securing BMS\u2019 loan have fallen to around $5 million, while the outstanding principal and interest are roughly $20 million. <\/p>\n
Bitfarms \u201cdetermined that it would be advisable to seek more favorable terms from BlockFi and potentially take other steps to reduce the BMS obligations,\u201d the company said. <\/p>\n
Jeff Lucas, Bitfarms\u2019 chief financial officer, further explained:<\/p>\n
\u201cConsidering today\u2019s challenging market conditions, we are seeking to modify our Washington state debt facility to achieve terms that are better aligned with the market outlook and our business strategy.\u201d<\/p><\/blockquote>\n