(Bloomberg) -- Bankrupt crypto miner Rhodium Encore LLC received court approval for an unusual debtor-in-possession financing plan on Friday that offers options to borrow in either US dollars or Bitcoin.
Galaxy Digital, the blockchain firm run by Mike Novogratz, has offered to provide either $30 million or 500 Bitcoin to fund Rhodium’s Chapter 11 bankruptcy, according to court papers. The dollar loan has a 14.5% annual interest rate, while the Bitcoin loan bears a 9.5% interest rate.
With lender’s consent, Rhodium could repay the Bitcoin loan in dollars at an exchange rate at “reasonable published market spot prices” at the closing before the due date.
Using cryptocurrency to fund Chapter 11 is unusual, even though several firms in the industry have gone belly-up in recent years. Because the price of Bitcoin can be so volatile, it is difficult to know how much loan payments will total, whatever the interest rate.
Crypto firm Bittrex Inc. also sought Bitcoin funds to wind down its US operations and repay customers.
Rhodium, which uses facilities in Texas to mine Bitcoin, filed bankruptcy in August. The company’s financial distress mainly resulted from a soured relationship with its landlord and power supplier Whinstone US, Inc., David Dunn, Rhodium’s co-chief restructuring officer said in court papers.
Rhodium’s rival Riot Platforms acquired Whinstone.
The case is Rhodium Encore LLC, 24-90448, US Bankruptcy Court, Southern District of Texas (Houston)
--With assistance from Jonathan Randles.
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