Rhodium filed for bankruptcy under Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas.
Rhodium Enterprises is a Texas-based Bitcoin mining firm known for using liquid-cooling technology to improve mining efficiency. The company focuses on large-scale Bitcoin mining operations, leveraging the abundant and affordable energy resources in Texas. Rhodium has always tried to increase its mining power while maintaining a sustainable and environmentally friendly approach to mining.
In a shocking turn, this Bitcoin mining firm filed for bankruptcy under Chapter 11 along with six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. As per the filing document, this financially struggling company has debts between $50 million and $100 million, and its total assets are between $100 million and $500 million.
#Bitcoin mining firm #Rhodium files for bankruptcy under Chapter 11 code with 6 of its subsidiaries pic.twitter.com/jUmD9o6wQ5
— Bitcoinik (@Bitcoinikdotcom) August 27, 2024
Documents show that Rhodium Enterprises is facing financial struggles, having failed to repay $54 million in loans in July. Despite raising $78 million in loans for its subsidiaries in 2021, the company encountered disagreements among stakeholders over debt restructuring proposals, leading to a default. Now, under Chapter 11 bankruptcy, Rhodium plans to reorganize its debts while continuing its operations, aiming to negotiate a new repayment plan.
Bitcoin Mining Firms & Struggles
In the past couple of years, the majority of Bitcoin mining companies have sought similar protection. Core Scientific, for instance, filed for Chapter 11 in December 2022, citing falling cryptocurrency prices and higher energy costs. However, the company finally emerged from bankruptcy early this year.
According to experts, Rhodium was severely affected by the last bear cycle. In 2023, competitor Riot Platforms filed a lawsuit against Rhodium Enterprises to recover more than $26 million in unpaid fees related to the use of Riot’s Whinstone Bitcoin mining facilities.
Notably, profits for Bitcoin miners have sharply declined due to the Bitcoin halving event in April 2024. The reduction in Bitcoin miner rewards following the halving has squeezed profit margins, while higher electricity prices have further pressured miners’ financial performance.
Now, all eyes are on the Bitcoin price, as a high Bitcoin price may help miners to survive in a healthy environment. Bitcoin experts believe the trade price of Bitcoin will surge by 100%+ in the next 7-8 months. If this does not happen, it could have serious consequences not only for the Bitcoin market but also for the miners who support the Bitcoin network.
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