BlockFi Sells $160M Bitcoin Mining Hardware-Backed Loans in Bankruptcy

• BlockFi filed for Chapter 11 bankruptcy in November 2022 citing exposure to the just collapsed FTX.
• The crypto lender plans to sell off $160 million in loans backed by Bitcoin mining hardware as part of the bankruptcy legal proceedings.
• Bidders have until January 24 to send offers.

In November 2022, BlockFi, a cryptocurrency lending service, filed for Chapter 11 bankruptcy in the United States after its exposure to the just collapsed FTX. The company’s bankruptcy proceedings have now led to the decision to sell off $160 million in loans backed by Bitcoin mining hardware.

The loans in question are backed by about 68,000 Bitcoin mining machines. Before the bankruptcy, the company had announced a 20% cut in its workforce in June 2022 due to the crypto prices meltdown. It had also been reported that BlockFi was in talks to raise funding at a $5 billion valuation, but the plan was derailed by the bankruptcy.

The process to sell off the Bitcoin mining hardware-backed loans began last year, and some of the loans have already defaulted since then. This means that the loans are candidates for under-collateralization following the drastic decline in the prices of Bitcoin mining hardware.

In an interview with one popular media outlet, Harrison Dell, a director at Australian law firm Cadena Legal, said that the loans are backed by a “substantial” amount of Bitcoin mining rigs. He added that the bankruptcy court would have to consider the bid amounts of the buyers as well as the recovery rate of the debts when making a decision on the sale.

Bidders have until January 24 to send offers to BlockFi. The bids will be evaluated and a decision on the sale will be made by the bankruptcy court. It is believed that the sale of the Bitcoin mining hardware-backed loans will help BlockFi to pay off some of its creditors and help the company to get back on its feet.

The sale of the Bitcoin mining hardware-backed loans is a big step for BlockFi, and the outcome of the sale will be keenly followed by the crypto community. It remains to be seen whether the company will be able to come out of this difficult situation and continue to offer its services to its customers.