Cathedra to Deleverage Bitcoin Mining Debt with Equity

Canadian bitcoin mining firm Cathedra has joined the ranks of publicly traded operations aiming to alleviate their financial positions in preparation for the impending halving.

In an announcement on Tuesday, the company revealed plans to repay C$2 million, thereby retiring C$3.3 million of its debts and reducing its total outstanding principal amount to C$16.5 million.

Additionally, Cathedra said it will further settle up to C$10.9 million owed to debt holders by issuing them up to 98 million shares of its common stocks. If the full deleveraging effort materializes, Cathedra’s outstanding debt liabilities would shrink to C$5.6 million, or about $4.1 million.

The company also signed a binding term sheet with its debt holders, extending the maturity date by an additional year for the remaining debts to Nov. 11, 2025. This extension will carry the same 3.5% interest rate.

Public bitcoin mining entities, irrespective of size, have been cautiously undertaking efforts to lessen their financial burdens since Q3’22 when the bitcoin’s price nosedived to below $20,000.

The Q3’23 data from a dozen mining companies collectively indicate a cash outflow of $14 million associated with debt financing activities. To provide context, these 12 companies had a net cash outflow of $16 million and $80 million in Q2 and Q1, respectively.

Simultaneously, these operations have continued to rely on liquidating bitcoin to cover operational expenses, along with equity dilution to facilitate capital growth and brace for the impending halving.

Notably, the same 12 companies managed to raise $766 million within the first nine months of this year.