Bitcoin mining firm Rhodium Enterprises has filed for voluntary bankruptcy under Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas. Detailed in the filing made on August 24, the company’s problem shows that the company has debts between $50 million and $100 million and total assets of between $100 million and $500 million. The bankruptcy filing also includes six subsidiaries: Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW.
There has been pressure on the financial situation of Rhodium Enterprises in the past several months. In July, the company was accused of not repaying $54 million owed to the lenders as loans. They had earlier sourced $78 million in loans in 2021 for its subsidiaries to finance their operations. To reorganize its debt through two plans, the company’s failure to address the issue was a result of conflicts between stakeholders.
Chapter 11 bankruptcy enables Rhodium to restructure some of its debts and run the business simultaneously. This process allows the company to reach out to creditors to have the agreed repayment schedule changed. Rhodium’s situation is not exceptional hence not surprising belonging to the cryptocurrency mining industry.
Bitcoin Halving and Rising Energy Costs Impact Rhodium’s Mining Revenue
Core Scientific is another firm that has also filed for bankruptcy in the past. Core Scientific filed for Chapter 11 in December 2022 because of such issues as the decline in the price of cryptocurrencies and the increase in electricity prices. The company came out of bankruptcy in early 2024, stabilizing its financial condition.
Cryptocurrencies have been in a bear market for quite some time now, taking a toll on rhodium. Later in the year 2023, competitor Rio Platforms sued Rhodium Enterprises for over $26 million in unpaid fees over the usage of Riot’s Whinstone Bitcoin mining sites.
Moreover, it is also important to note that Bitcoin miners, including Rhodium, reported low mining revenue, which was attributed to the effects of the Bitcoin halving in April. Halving lowered miner rewards, shaving away at profit motives even more. Other factors also include increased electricity costs which has put more pressure on miners financially. Rhodium has appointed Quinn Emanuel Urquhart & Sullivan as its general bankruptcy counsel and Province as its restructuring adviser.
