Bitcoin mining firm Rhodium Enterprises has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, revealing significant financial struggles. The filing, submitted on August 24, includes Rhodium’s six subsidiaries and indicates liabilities ranging from $50 million to $100 million, with assets valued between $100 million and $500 million.
Rhodium’s financial woes have been evident for some time, with reports indicating the company failed to repay $54 million in loans in July. Despite attempts at debt restructuring, disagreements among stakeholders led to the bankruptcy filing. Under Chapter 11, Rhodium aims to reorganize its debts while continuing operations, negotiating a revised repayment plan.
This development mirrors the struggles of other Bitcoin mining firms. For example, Core Scientific filed for Chapter 11 in December 2022, burdened by plummeting cryptocurrency prices and rising energy costs. Rhodium’s challenges are further compounded by a recent lawsuit from competitor Rio Platforms, seeking to recover over $26 million in unpaid fees.
The broader Bitcoin mining industry is also grappling with declining profits, exacerbated by the April halving event, which reduced miner rewards. According to JPMorgan, these factors, along with higher electricity costs, have severely squeezed miners’ profit margins.
Rhodium has enlisted law firm Quinn Emanuel Urquhart & Sullivan as bankruptcy counsel and Province as its restructuring adviser as it navigates these challenging times. The outcome of this bankruptcy could have significant implications for the already embattled Bitcoin mining sector.