New deal – Minors of Bitcoin (BTC) are in the list of the main victims of the crypto winter. Bear market obliges, This company had to resolve to return its machines to one of its creditors, to ensure its cash flow.
BTC mining machines on the altar of debt
The company had postponed the publication of its financial results for the second quarter of this year for seven days. The goal is to be able to conclude negotiations. On the one hand, they will enable it to reduce its current debts, while increasing its borrowing capacity.
According to a communiqué from August 16, the bitcoin miner Stronghold managed to reach an agreement with the New York Digital Investment Group (NYDG). It concerns reimbursement, or rather the cancellation, of 67.4 million dollars of debts.
To benefit from this measure, which allows the company to cut by just over 52%, the 127.9 million debts listed in its latest financial report, Stronghold will return 26,200 mining machines from Bitcoin to NYDG.
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Liquidity crisis: Stronghold restructures its finances
The miners would have parted with 15,000 BTC and 6,200 BTC, in the month of June and July. These quantities represent respectively 400% and 158% of their monthly production.
These figures taken from the report ofArcane Research illustrate the complex situation in which Bitcoin miners currently find themselves. They must find liquidity at all costs. This is necessary to continue to finance their operating costs although the markets undoubtedly remain in the red.
To have sufficient cash, Stronghold also negotiated, a restructuring of its convertible notes with the lender WhiteHawk Capitalas well as an amendment to its warrants.
The provisions that will be made in this context, combined with the cancellation of $67.4 million in debt with the NYDG, will allow the Bitcoin miner to reduce the amount of its current debts by 55%a total of $79 million in absolute terms.
Stronghold hopes the deals will help it improve its ‘cash flow forecast’ of 40 million dollars approximately, by the end of 2023.
Stronghold thus reinforces the financial capacities of the company through these agreements. The company, and the industry as a whole, need to find sustainable solutions that will see them through a crypto winter. This is still likely to last. After the hopes – maybe naive – a sustained bullish recovery following Bitcoin’s foray above $25,000, markets must now consider a return below $20,000.
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