Argo Blockchain, a major crypto mining company publicly listed in London (LSE:ARB) and New York (NASDAQ:ARBK), has dismissed the vision of potential bankruptcy with a strategic deal with Galaxy Digital Holdings, Ltd, a financial firm focused on digital assets, owned by Mike Novogratz.

According to the press release published on Wednesday, Argo will sell its Texas-based cryptocurrency mine Helios for $65 million. In addition, Galaxy will refinance Argo's loans that were taken out to finance the development of its ongoing business. The deal is scheduled to be finalized on December 28, 2022.

Mike Novogratz's Galaxy Rescues Argo Blockchain from Bankruptcy

In addition, Novogratz's company has decided to host the mining machines belonging to Argo, which are located at Helios in Dickens County, Texas.

"This transaction with Galaxy is a transformational one for Argo and benefits the Company in several 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," Peter Wall, the Chief Executive of Argo Blockchain, said.

"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."

Earlier on Tuesday, Argo suspended trading in its shares on the US Nasdaq. According to information released by the company, the suspension had to take place in connection with today's announcement and closure of the London Stock Exchange on December 27. However, the mining company assured the public that regular trading would be restored as early as Wednesday.

Galaxy Provides Argo with New Loan

In addition to purchasing the Texas-based cryptocurrency farm, Galaxy will issue a new asset-backed loan with a total value of $35 million, maturing in 36 months. Nearly 24,000 Bitmain S19J Pro miners currently operating in Helios and Argo data centers located in Canada are used as collateral for financing.

The funds raised will repay the miner's current $84 million debt to NYDIG ABL LLC and $1 million to North Mill Commercial Finance, LLC.

"Upon this repayment, approximately $6 million (£5 million) will be returned to the Company from a collateral account controlled by NYDIG ABL LLC," Argo stated in the press release.

Deepening Crisis of the Crypto Mining Industry

News that Argo was facing bankruptcy was initially reported in early December. Although the company said the claims were false, it acknowledged that it was at risk of lacking the liquidity needed to maintain ongoing operations.

In its latest deal with Novogratz's Galaxy, Argo managed to avoid Chapter 11 bankruptcy, but the situation shows the deepening crisis of the mining industry. Due to the prolonged cryptocurrency winter, the profitability of BTC mining has dropped almost to zero, with worse-than-expected financial results reported by all major miners.

Revenue for HIVE Blockchain Technologies Ltd. (NASDAQ:HIVE), a publicly traded mining company, fell 45% to $29.6 million in the third quarter of 2022. At the same time, Canaan Inc. (NASDAQ:CAN), a crypto mining hardware manufacturer, reported that the net income plummeted 90% quarter-over-quarter to $8.6 million.