BlocksInform
Crypto bankruptcy loan blockfi platform received court approval to put its bitcoin extraction company to auction.
The company plans to sell its equipment as quickly as possible in order to benefit from the current favourable market conditions.
Selling While They Can
BlockFi lawyer Francis Petrie told US Bankruptcy Judge Michael Kaplan on Monday that the company has already received bids for many of its assets, and expects more to come, according to BNN Bloomberg. This comes a week after the company agreed to sell $160 million in loans backed by its Bitcoin mining hardware – some of which were already under collateralized
"We have received significant interest in the market for auction purposes and the current volatility in the cryptocurrency market, which means we must act quickly," said Petrie. Bitcoin price increased from less than $17,000 to more than $23,000 in January, bringing down the average bitcoin miner in the profit zone, according to Glassnode.
BlockFi's saleable assets include its ASIC – hardware specifically designed to extract bitcoin profitably. Celsius – a rival crypto lender that went out of business last summer – also sold their mining equipment as part of their restructuring process, plans for the sale of tens of thousands more machines.
Blockfi asset offers are due by February 20. An auction will take place a week later, with blockfi to come back before the courts in March to examine any proposals for agreements.
Asic prices fell last year alongside the price of Bitcoin, because of the return generated by these machines being directly correlated to the value of the coins they produce. Like Bitcoin, asics have often been used as collateral for loans to buy even more equipment, creating a vulnerable configuration for cascading liquidations when the market settled.
Core Scientific – one of North America’s largest Bitcoin mining firms – announced plans to shut down 37,000 Bitcoin mining rigs earlier this month, whose energy costs were partially subsidized by Celsius. The miner placed some blame on Celsius for its own bankruptcy in December.
BlockFi filed for bankruptcy shortly after the collapse of FTX and Alameda Research in November, to which the lender had over $1.2 billion in cumulative exposure.
Capitalizing on the Collapse
While numerous other major miners – including Iris Energy and Argo Blockchain – struggle under the circumstances, other firms have chosen to capitalize while mining machines are going for cheap.
Bitcoin technology firm Blockstream announced a $125 million raise last week dedicated to expanding its fleet of mining and hosting services. Grayscale also announced a mining fund in partnership with Foundry last October, intentionally released during a so-called “shakeout” phase for the mining industry to scoop up low-cost equipment.
Analysts are still somewhat torn on whether Bitcoin's January gains are a misleading "bull trap", or whether they mark the start of another Bitcoin bull market. Amid the confusion, on-chain data shows that investors who were once underwater are taking profit while they can, adding sell pressure to the market.
