To avoid bankruptcy, Bitcoin miner Argo Blockchain is selling off its largest mining site while keeping its equipment.
Argo announced (1) Wednesday that it would sell Galaxy Digital, its flagship Helios factory in Dickens County, Texas, for $65 million.
Under the terms of the two-year deal, Galaxy will serve as Argo's host for its bitcoin mining hardware. On Wednesday, December 28th, the deal is expected to close.
The London-based corporation claims that the transaction will simplify Argo's operational structure while reducing its debt by $41 million.
Also, Galaxy will provide Argo with a $35 million asset-backed loan under the terms of the agreement. The 23,619 Bitmain S19J rigs at Helios and other hardware at Argo's Canadian data centers will be pledged as collateral for the loan.
The $84 million in debt owing to NYDIG will be repaid in full with the cash proceeds of the sale of the Dickens County facility, together with prepayment interest and other costs.
CEO Peter Wall claimed (4) in a video message, "although we have sold the Helios facility, we have not sold any of our mining machines. Those are going to continue to mine at the Helios facility."
Argo warned its investors earlier this month that it may not have enough money to last until the end of the year. The miner suggested that negotiations were advanced about the sale of assets in connection with an asset financing transaction and that it intended to negotiate a settlement without declaring bankruptcy.
The company has decided to shift its attention back to its Canadian businesses, claiming that the Galaxy transaction will not have any bearing on them
"except for the use of certain mining machines and other assets located in Quebec as collateral for the asset-backed loan."
At first, Argo will focus on expanding and perfecting its two data centers in Quebec, both of which run on cheap hydroelectricity.
When it comes to Argo's Canadian farms, those in Quebec are more miniature. Comparatively, the one in Mirabel covers 20,000 square feet and has 5 MW of power, while the one in Base Comeau, Quebec, is stretched out over 40,000 square feet and has 15 MW of power.
The CEO of Argo Optimistic of Bitcoin Recovery
Nonetheless, the London Stock Exchange doubled in value after hearing that Argo may soon be able to avoid bankruptcy (LSE).
While Argo is still down over 90% year to date, its stock price soared 50% in pre-market Nasdaq trade.
Before the news, Argo had requested that trade in its Nasdaq-listed stock be halted on Tuesday. Stock trading in the company was halted on the London Stock Exchange earlier this month.
The mining company indicated it would not be issuing a quarterly report for Q3 2018. The UK Financial Conduct Authority, which regulates trading in the stock, stipulates that quarterly earnings reports are sufficient.
In addition to Argo, bitcoin miners have been hit hard by expensive electricity, low token values, and overwhelming debt loads. A major mining company in North America, Core Scientific, declared bankruptcy last week.
Wall, CEO of Argo, remarked that the firm had survived previous bear markets by learning to adapt to them.
"The key is to do well when things are good, and then to make sure that you can continue through the hard ones so that you can get to the other side," he said.