Galaxy Digital Holdings inks agreement with Argo Blockchain for Texas mining facility

Helios can draw upon 180 megawatts of mining capacity, and includes immersion cooling technology

Joseph Morton

Published

December 29, 2022

Galaxy Digital Holdings (TSX: GLXY) signed an agreement earlier this week to acquire Helios blockchain mining facility from Argo Blockchain (NASDAQ: ARBK) for USD$65 million.

The transaction with boost Galaxy’s bitcoin mining operations and services, while providing access to tax-efficient mining infrastructure and reduce reliance on third-party hosting providers.

“Galaxy is aspiring to be one of the most trusted nodes of the decentralized future. The acquisition of Helios represents a new stage over our two-year journey in bitcoin mining that increases our operating scale and breadth of solutions, creating sustainable value for the biggest decentralized digital asset network and shareholders alike,” said Chris Ferraro, president and chief investment officer at Galaxy.

Galaxy’s plans include using Helios as its flagship mining facility and therefore will keep the entire operations team. Additionally, the proceeds of the acquisition serve as a significant alternative source of revenue as Galaxy can now offer third-party hosting for bitcoin mining operations. Both Galaxy and Argo will collaborate to ensure the transition goes smoothly.

Acquisition comes with a $35 million loan for Galaxy

Helios is a bitcoin mining operation in Dickens County, Texas. It can draw upon 180 megawatts of mining capacity, and includes immersion cooling technology. When certain approvals are met, Helios will provide Galaxy with as much as 800 megawatts of capacity. This allows the company to grow both its own mining operations, and its hosted operations, beyond previously stated benchmarks.

The transaction comes with a new senior-secured $35 million loan, secured by a collateral packaging including Argo’s mining equipment. Additionally, Argo entered into a two-year hosting agreement with Galaxy, which secures a place for Argo’s mining machines at the Helios facility.

Deal helps Argo survive the winter

On Argo’s side, Peter Wall, Argo’s chief executive calls the deal transformational in that it helps the company in multiple different ways.

“It reduces our debt by $41 million (£34 million) and provides us with a stronger balance sheet and enhanced liquidity to help ensure continued operations through the ongoing bear market. It also allows us to focus on optimizing our operations with significantly lower capex and opex requirements,” Wall said.

Argo gets to keep its Bitcoin mining machines, which pump out Bitcoin at a 2.5 exahash per second total hashrate capacity. It also gets to offload hosting charges onto a third party instead of pulling all of that extra weight on the liabilities side of its balance sheet.

Bankruptcy is a constant threat hovering around the bitcoin mining industry in the recent months. The market has suffered considerably courtesy of rising energy prices and a subsequent decrease in mining revenues, which has reduced margins and increased losses.

The latest two collapses include Core Scientific, which was one of the largest mining firms in the United States. Before that, Compute North filed for chapter 11 bankruptcy protection in September months after raising $385 million in funding several months earlier.