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Bitcoin miner Argo will stay afloat thanks to a $100 million deal with Galaxy Digital

On Wednesday, Galaxy Digital and Argo Blockchain announced that they had reached an agreement for Galaxy Digital to buy Argo Blockchain’s bitcoin mining facility Helios for $65 million.

Galaxy will also acquire “associated activities” from Argo Blockchain as part of the agreement. Galaxy will lend Argo $35 million while it reorganises, with mining equipment owned by Argo serving as collateral. Argo will engage into a two-year hosting deal with Galaxy to offer a space for its mining equipment at the Dickens County, Texas, facility, but will retain ownership of the machines.

This agreement will save both Galaxy and Argo from financial ruin as Galaxy expands its mining activities. Argo stated in a statement that the deal would “strengthen Argo’s financial sheet” and enhance the company’s liquidity situation, allowing it to “maintain operations.”

Argo CEO Peter Wall stated in a statement that the funding will assist lower debt by $41 million and provide liquidity “to help secure sustained operations during the present bear market.”

Bankruptcy has been looming over the bitcoin mining business for the last several months owing to the market downturns brought on by increasing energy costs and falling miner revenues, which have tightened margins and exacerbated profit losses.

One of the biggest publicly listed cryptocurrency mining enterprises in the United States, Core Scientific, filed for Chapter 11 bankruptcy last week. After collecting $385 million in strategic capital seven months earlier, bitcoin mining data business Compute North filed for Chapter 11 bankruptcy protection in September.

Galaxy stated in a statement that the deal will help speed up the growth of the company’s bitcoin mining operations and services, provide it access to tax-efficient mining infrastructure, and decrease its dependency on external hosting services.

Galaxy’s aim to expand its mining activities is shown by the purchase of Helios, which marks the company’s second facility that it will own and run after the announcement of its first proprietary mining site earlier this year.

Galaxy’s president and chief investment officer, Chris Ferraro, said in a press statement that this purchase marks a “new stage” in the company’s two-year bitcoin mining journey, as it expands the company’s operational size and variety of solutions.

On the London Stock Exchange, Argo shares increased by 77.43%, closing the day at about $6.39 GBX. Meanwhile, Bitcoin was trading at roughly $16,750, down marginally from the previous day.