Rhodium Bitcoin Mining Firm Declares Bankruptcy in Texas Court

Key takeaways:

• Rhodium Enterprises disclosed up to $100M in liabilities when it filed for voluntary bankruptcy under Chapter 11 in the US Bankruptcy Court for the Southern District of Texas.
• The document states that the company’s total assets are estimated to be between $100 million and $500 million, while its debts fall between $50 million and $100 million.

The Bitcoin mining company Rhodium Enterprises disclosed up to $100 million in liabilities when it filed for voluntary bankruptcy in the United States Bankruptcy Court for the Southern District of Texas under Chapter 11.

Six subsidiaries are listed in the petition, which was filed on August 24. They are Rhodium Encore, Jordan HPC, Rhodium JV, Rhodium 2.0, Rhodium 10MW, and Rhodium 30MW. 

The document states that the company’s total assets are estimated to be between $100 million and $500 million, while its debts fall between $50 million and $100 million.

The filing for bankruptcy of Rhodium comes after earlier news of financial difficulties within the corporation. Rhodium Encore and Rhodium 2.0’s parent company, Rhodium Enterprises, is said to have defaulted on $54 million in loans to lenders in July. Rhodium raised $78 million in loans for its affiliates in 2021.

There were apparently two suggestions for debt restructuring made before the deadline, but conflicts among parties brought on the default. The company will be able to reorganize its obligations while carrying on with business as usual under Chapter 11 voluntary bankruptcy, enabling it to establish a repayment plan with updated terms.

Similar protection has already been sought by other Bitcoin mining companies. For example, Core Scientific filed for Chapter 11 in December 2022, citing rising energy bills and declining Bitcoin values. The firm came out of bankruptcy in the first part of 2024.

One crypto miner that the most recent bear market has badly impacted is rhodium. Rival Rio Platforms sued Rhodium Enterprises in 2023 to recoup over $26 million in unpaid fees for using Riot’s Whinstone Bitcoin mining facilities.

Furthermore, recent JPMorgan research claims that the April halving event caused a dramatic fall in Bitcoin miner profits. The halving of Bitcoin miner awards has strained profit margins, and rising electricity costs have further strained miners’ financial performance.

Quinn Emanuel Urquhart & Sullivan will serve as Rhodium’s general bankruptcy counsel, while Province will serve as a restructuring adviser.