Bitfarms pays a $7.75 million debt to BlockFi.

Since June 2022, the Toronto-based Bitcoin mining company has reduced its debt by nearly 85%.

Bitfarms, a bitcoin miner, has settled its debt obligations with BlockFi, bringing an end to its brief relationship with the bankrupt cryptocurrency lender.

Bitfarms announced on February 9 that it had settled its $21 million debt obligations with BlockFi for a single $7.75 million cash payment. The agreement came after Bitfarms warned that it might default on its BlockFi loan.

“This successful negotiation and settlement, combined with the earlier restructuring and elimination of our capital expenditure obligations in December, furthers our initiatives to reduce indebtedness,” said Jeff Lucas, Bitfarms’ chief financial officer.

Backbone Mining Company, Bitfarms’ wholly owned subsidiary in Washington state, is central to Bitfarms’ relationship with BlockFi. BlockFi provided Backbone Mining with a $32 million equipment financing loan in February 2022. The loan’s outstanding principal and interest totaled $21 million as of January 31, 2023.

Following the settlement, Backbone’s assets, including 6,100 miners, are free and clear.

On January 13, Cointelegraph reported that Bitfarms was attempting to modify its loan agreement with BlockFi in order to obtain “more favourable terms” and reduce Backbone Mining’s obligations. The original loan facility was secured by Backbone Mining’s assets, which included mining equipment and a percentage of the Bitcoin generated by its rigs. During the bear market, the assets securing Backbone Mining’s loan dropped significantly.

BlockFi filed for Chapter 11 bankruptcy on November 28, just weeks after crypto exchange FTX went bankrupt. In July 2022, the lender received a $240 million rescue package from FTX US, so its fate appeared to be linked to the health of Sam Bankman-crypto Fried’s empire.