BlockFi, a cryptocurrency lender, has been granted permission to sell $47 million worth of its mining equipment by a US bankruptcy judge. This move comes after BlockFi filed for Chapter 11 bankruptcy protection in January, citing regulatory pressure.
The sale of the mining equipment is expected to generate funds that will be used to repay the company’s creditors. According to reports, BlockFi’s largest creditor is Silver Lake, which is owed approximately $25 million.
BlockFi mining hosting equipment
BlockFi’s mining operations, which were located in upstate New York, ceased operations in December due to high electricity costs and declining profitability. The company has since been looking for ways to recoup its losses and pay off its debts.
The decision to allow BlockFi to sell its mining equipment was made after a hearing in a US bankruptcy court on March 23. The equipment will be sold to Northern Data, a German data center operator, for $47 million.
The sale of the their used BTC Bitcoin mining hosting equipment is expected to close by the end of April, pending approval from the bankruptcy court. Once the sale is complete, BlockFi will be able to use the proceeds to pay off its creditors and emerge from bankruptcy.
What Led to BlockFi’s Bankruptcy Filing?
BlockFi’s bankruptcy filing came after the company faced regulatory pressure from the New Jersey Bureau of Securities. The bureau had issued a cease-and-desist order against BlockFi, alleging that the company had sold unregistered securities to its customers.
BlockFi denied the allegations and said that it was confident in its legal position. However, the company was still forced to halt its interest account product in New Jersey.
The cease-and-desist order from the New Jersey Bureau of Securities was not the only regulatory issue faced by BlockFi. In July 2021, the company received a warning letter from the Texas State Securities Board, alleging that it was offering unregistered securities in Texas.
BlockFi’s Mining Operations Cease Operations in December
BlockFi’s mining operations were located in upstate New York and were powered by hydroelectricity. The company had invested heavily in its mining operations, spending approximately $25 million on equipment and infrastructure.
However, the mining operations ceased operations in December due to high electricity costs and declining profitability. The closure of the mining operations was a major blow to BlockFi, as it was one of the company’s main sources of revenue.
BlockFi Authorized to Sell $47M in Mining Equipment
The decision to allow BlockFi to sell its mining equipment was made after a hearing in a US bankruptcy court on March 23. The equipment will be sold to Northern Data, a German data center operator, for $47 million.
The sale of the mining equipment is expected to close by the end of April, pending approval from the bankruptcy court. Once the sale is complete, BlockFi will be able to use the proceeds to pay off its creditors and emerge from bankruptcy.
BlockFi to Use Sale Proceeds to Repay Creditors and Emerge from Bankruptcy
BlockFi has stated that it intends to use the proceeds from the sale of its mining equipment to repay its creditors and emerge from bankruptcy. The sale is expected to generate approximately $47 million, which will be used to repay BlockFi’s largest creditor, Silver Lake.
Once BlockFi has emerged from bankruptcy, it will be able to resume its operations and continue to offer its products and services to its customers. The company has stated that it remains committed to complying with all regulatory requirements and ensuring the safety and security of its customers’ funds.
BlockFi is known for its cryptocurrency lending and borrowing services, which allow users to earn interest on their crypto holdings or borrow funds against them. The company has also recently launched a Bitcoin rewards credit card, which offers cashback in the form of Bitcoin on purchases made with the card.
Despite the recent setbacks faced by BlockFi, the company has continued to innovate and expand its offerings. In addition to the Bitcoin rewards credit card, the company has also launched a mobile app and introduced new features such as direct deposit for its interest account product.
The sale of BlockFi’s mining equipment to Northern Data is expected to be a win-win situation for both companies. Northern Data will be able to expand its mining operations and BlockFi will be able to generate funds to repay its creditors and emerge from bankruptcy.
The decision to allow BlockFi to sell $47 million worth of its mining equipment is a positive development for the company and its creditors. Once the sale is complete, BlockFi will be able to use the proceeds to repay its debts and continue to offer its products and services to its customers. While the regulatory environment for cryptocurrency companies can be challenging, BlockFi’s ability to adapt and innovate will likely help it to succeed in the long run.
