Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) told investors it has agreed to sell its Texas-based Helios blockchain mining facility for $65m (£54m) to Galaxy Digital (TSX-V) :GLXY) and now has a “renewed focus” on its Canadian operations.
The cryptocurrency miner said it has also refinanced its asset-backed loans with a new $35 million loan from Galaxy with a three-year term.
Argo said it will use a portion of the loan along with cash from the sale to repay all existing debt, prepayment interest and other fees on approximately $84 million owed to NYDIG ABL and $1 million to North Mill Commercial Finance.
Making this repayment will result in approximately US$6 million being returned to Argo from an escrow account controlled by NYDIG.
As part of the deal, which is being done by an Argo subsidiary and is expected to close today, Galaxy has agreed to host Argo’s 23,619 Bitmain S19J Pro miners on Helios, which were also used as part of the collateral package for the loan.
Argo has agreed to guarantee the obligations of the subsidiaries and provide certain additional guarantees for the financing. The company has also committed to working with Galaxy to ensure a smooth transition on Helios and minimize any disruption to operations.
The machines at Helios will remain operational on site under a two-year hosting agreement with Galaxy, Argo said, with access to power that Galaxy plans to arrange as part of a fixed-price power purchase agreement with a local power company for the facility.
Galaxy will be paid a hosting fee, and the two companies have agreed to work together to design a mitigation strategy to participate in certain demand response programs offered by the Electric Reliability Council of Texas, which manages the Texas power grid.
Argo said it plans to “refocus efforts on growing and optimizing operations” for its two Canadian data center assets, which it said are not affected by the Galaxy deal except for the use of certain mining machines and other assets in Quebec as collateral for the asset-backed loan.
The data centers in Baie-Comeau and Mirabel in Quebec are fully powered by low-cost hydropower, with 15 MW and 5 MW power capacity respectively and a total of 140 PH/s hash rate capacity.
Argo CEO Peter Wall called it a “transformational deal” to strengthen its balance sheet to “help ensure continued operations through the ongoing bear market” and allow the company to “focus on optimizing our operations with significantly lower capital and operating requirements”.
He added: “Argo will maintain ownership of its fleet of Bitcoin miners, which represent approximately 2.5 EH/s of total hashrate capacity. Our miners currently operating on Helios will continue to be hosted there by Galaxy, which is of high quality, institutional participant in the Bitcoin mining space.”
Earnings results for the third quarter will not be reported, the company said, because of the agreement.
