Argo Blockchain PLC focuses on Canada after agreeing sale of Helios facility to Galaxy Digital

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 US$65mln (£54mln) 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 US$35mln loan from Galaxy with a three-year term.

Argo said it will use a portion of the loan along with the cash from the sale to repay all existing indebtedness, prepayment interest, and other fees of approximately US$84mln owed to NYDIG ABL and US$1mln owed to North Mill Commercial Finance.

Making this repayment will result in roughly US$6mln being returned to Argo from a collateral account controlled by NYDIG.

As part of the deal, which is being made by an Argo subsidiary and is expected to close today, Galaxy has agreed to host Argo’s 23,619 Bitmain S19J Pro mining machines at Helios, which were also used as part of the collateral package for the loan.

Argo has agreed to guarantee the obligations of its subsidiaries and provide certain additional collateral for, the financing. The company has also committed to working with Galaxy to ensure a smooth transition at Helios and minimize any disruption to operations.

The machines at Helios will remain operating at the site under a two-year hosting agreement with Galaxy, Argo said, with access to power that Galaxy is planning 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 collaborate on designing a curtailment strategy in order 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 its efforts on growing and optimizing operations” for its two Canadian data center assets, which it said are not affected by the Galaxy deal apart from the use of certain mining machines and other assets located in Quebec as collateral for the asset-backed loan.

The data centers at Baie-Comeau and Mirabel in Quebec are powered fully by low-cost hydroelectricity, with 15 MW and 5 MW of power capacity respectively and a total 140 PH/s of hashrate capacity.

In a statement, Argo chief executive Peter Wall called it a “transformational” deal for strengthening the balance sheet to “help ensure continued operations through the ongoing bear market” and allowing the company to “focus on optimizing our operations with significantly lower capex and opex requirements”.

He added: “Argo will maintain ownership of its fleet of Bitcoin mining machines, which represents approximately 2.5 EH/s of total hashrate capacity. Our miners currently operating at Helios will continue to be hosted there by Galaxy, which is a high-quality, institutional participant in the Bitcoin mining space.”

Earnings for the third quarter will not be reported, the company said, due to the deal.