BlockFi Sells Off $160 Million In Bitcoin Mining Machine Loans: Report

As part of bankruptcy proceedings, the bankrupt cryptocurrency lending company BlockFi intends to auction off $160 million in debts secured by over 68,000 Bitcoin mining rigs, according to reports.

As stated in a January 24 Bloomberg report citing “people familiar with the subject,” the New Jersey-based company began the loan bidding process last year.

In November 2022, the crypto lender filed for Chapter 11 bankruptcy, blaming its demise on a substantial exposure to the now-defunct crypto exchange FTX.

However, they said that some of these loans have already fallen into default and need more security as a result of the drop in the cost of Bitcoin mining machines. Furthermore, the sources further state that bidders have until January 24 to submit their loan proposals.

BlockFi’s bankruptcy filing in November 2022 shows that the firm has over 100,000 creditors. Therefore, its attempt to liquidate its loans is probably a part of its efforts to repay creditors.

BlockFi Attempts To Auction Endangered Assets

In order to strengthen their digital asset treasuries, crypto lenders like BlockFi also got into the Bitcoin mining business. Since the previous crypto bull run, loans have raised close to $4 billion, per Bloomberg.

Moreover, New York Digital Investment Group (NYDIG), Celsius Network, Galaxy Digital, and Digital Currency Group’s (DCG) Foundry are some more significant financiers of cryptocurrency mining businesses.

The crypto-mining sector, unfortunately, had a dreadful year in 2022. High hash rates, competition, rising energy costs, and declining Bitcoin values have all been bad news for BTC miners.

Such troubled assets from faltering mining companies and insolvent crypto lenders are now in demand. To take advantage of this troubled asset market, crypto asset management Grayscale partnered with Foundry to create a fund that would invest in Bitcoin mining technology.

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BlockFi requested the court’s permission to pay incentives on January 23 since the company is having trouble keeping employees. The filing cites Chief People Officer Megan Crowell reportedly asserting, “the prospects for participants elsewhere have not dried up, despite a challenging moment in the digital asset business.”

As per Crowell, many employees are likely to leave the company without competitive pay. She also noted that this would have long-term financial implications for the business.