Galaxy would also acquire “associated operations” from Argo Blockchain as part of the acquisition. Galaxy will also make a $35 million loan to Argo as the company restructures, covered by a collateral package containing Argo mining equipment. Argo will retain ownership of its equipment at the Dickens County, Texas, site and will enter into a two-year hosting deal with Galaxy to host its mining machines there.
Not only will Galaxy’s mining activities expand as a result of this agreement, but Argo will also avoid bankruptcy. The sale will “strengthen Argo’s balance sheet” and improve the company’s liquidity situation, allowing it to “maintain operations,” according to a statement from Argo.
Argo’s debt will be reduced by $41 million, and its liquidity will be increased “to help secure sustained operations through the prolonged bear market,” said Argo’s CEO Peter Wall in a statement.
In recent months, bankruptcy has lingered in the bitcoin mining business as the market experiences substantial downturns owing to rising energy prices and declining miner revenues, which has tightened margins and exacerbated profit losses.
Core Scientific, one of the largest publicly traded crypto mining corporations in the United States, filed for Chapter 11 bankruptcy last week. Compute North, a bitcoin mining data provider, filed for Chapter 11 bankruptcy protection in September, seven months after obtaining $385 million in strategic capital.
“The acquisition will speed Galaxy’s bitcoin mining operations and services, give access to tax-efficient mining infrastructure, and lessen dependency on third-party hosting providers,” Galaxy stated in a statement.
Despite the fact that some miners are struggling, the Helios acquisition indicates Galaxy’s ambition to expand its mining activities, as Helios will be its second facility that it will own and control, following the announcement of its first proprietary mining site earlier this year.
This acquisition marks a “new stage” in Galaxy’s two-year bitcoin mining adventure, as it expands its operating capacity and variety of solutions, according to Chris Ferraro, president and chief investment officer at Galaxy.
On the London Stock Exchange, Argo shares soared 77.43% on the day to around $6.39 GBX. Meanwhile, the price of Bitcoin was down slightly on the day, hovering at $16,750 in the same time frame.