Bankrupt Bitcoin Mining Firm Secures Unique BTC Loan Approval Amid Financial Turmoil

Rhodium Encore LLC, a bankrupt bitcoin mining company, has recently received court approval for a distinctive debtor-in-possession financing plan, enabling them to borrow in either U.S. dollars or bitcoin. This remarkable move comes from Galaxy Digital Holdings Ltd., a blockchain firm led by Mike Novogratz, which has proposed a loan of either $30 million in U.S. dollars or 500 bitcoin.

The dollar loan is set at a 14.5% interest rate, while the bitcoin loan offers a more favorable 9.5% interest rate. Notably, Rhodium has the option to repay the BTC loan in dollars at a reasonable market rate at closing. This type of cryptocurrency-based funding is rare in Chapter 11 bankruptcies, largely due to the volatility associated with bitcoin.

Rhodium filed for bankruptcy in August 2024, primarily due to financial issues arising from a dispute with its landlord and power supplier, Whinstone US Inc., which has since been acquired by Rhodium’s competitor, Riot Platforms.