Bitcoin Mining Firm Compute North Files for Chapter 11 Bankruptcy
Compute North Holdings, a firm that offers data center services to cryptocurrency miners and blockchain firms, filed for bankruptcy in Texas.
Compute North Applies for Bankruptcy
Compute North, a Bitcoin mining hosting firm, has filed for chapter 11 bankruptcy, citing mounting pressure on the company as a result of the effects of crypto winter and increased energy costs. Dave Perrill, the company’s CEO, has also stepped down but will stay on the board.
The company filed for Chapter 11 bankruptcy on September 22 to the U.S. Bankruptcy Court for the Southern District of Texas, which is currently pending before Judge David Jones.
A Chapter 11 filing allows the company to continue its operations while it works out a plan to repay creditors. According to the statement, Compute North owes about $500 million to 200 creditors, with assets valued between $100 million and $500 million.
Compute North provides large-scale crypto mining hosting services and infrastructure, as well as hardware and a Bitcoin mining pool. It is one of the largest data center providers in the United States and has notable partners in the Bitcoin mining industry, including Compass Mining and Marathon Digital.
Both companies have issued statements via Twitter, stating that based on the information available at this time, their business activities will continue as usual.
“Compute North’s staff informed us today that the bankruptcy filing should not disrupt business operations. We are continuing to monitor the situation and will provide further updates as they become available,” noted Compass Mining.
A Costly Setback at Texas Mining Site
The bearish performance of Bitcoin in 2022 has had a great influence on the mining industry this year, and in the context of Texas, growing energy bills and multiple power outages during severe heat waves have also been unfavorable.
According to Bloomberg Business reporter David Pan, Compute North may have been hit by a costly delay to a major mining site in Texas, which it was unable to monetize for months. He noted:
“Compute North’s massive 280MW mining facility in TX was supposed to run rigs in April but it couldn’t due to pending approvals. From then to later this year when it finally was able to energize the machines, Bitcoin prices had gone through multiple downward cycles, fundraising opportunities dried up and major lenders scaled back.”
Compute North joins a long line of crypto entities that have either succumbed to crypto winter or played a role in its creation, such as Voyager Digital, Three Arrows Capital, Celsius Network, and BlockFi, to list a few.
On July 14, Celsius Network’s mining division, which announced plans to go public in March, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York, along with its parent firm. Poolin Wallet, the wallet service of one of the major bitcoin (BTC) mining pools, announced on September 13 that it would issue IOU (I Owe You) tokens to affected users following a freeze on withdrawals the previous week.
