Bitcoin (BTC) mining hosting company Compute North has filed for Chapter 11 bankruptcy, amid mounting pressure on the company due to the effects of the crypto winter and rising energy costs. The firm’s CEO, Dave Perrill, has also resigned, but will remain on the board.
The company filed for Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas on September 22, which is now pending before Judge David Jones.
Under a Chapter 11 filing, the business can still continue operations while it works out a plan to pay off creditors. The filing reportedly outlines that Compute North owes about $500 million to 200 creditors, while its assets are said to be worth between $100 million and $500 million.
Compute North offers large-scale crypto mining hosting services and facilities, hardware, and a BTC mining pool. It is one of the largest data center providers in the US. It has renowned partners in the BTC mining sector such as Compass Mining and Marathon Digital.
Both companies have come out with statements via Twitter, noting that with the information they have at this stage, their business operations will continue as normal.
“Compute North staff informed us today that the bankruptcy filing should not disrupt business operations. We continue to monitor the situation and will provide further updates as they become available.” indicated Compass mining.
A file related to one of our hosting providers was published today. Based on the information available at this time, we understand that this presentation will not affect our current mining operations.
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) September 22, 2022
BTC’s bearish performance in 2022 has had a significant impact on the mining sector this year, and in the context of Texas, rising energy costs and multiple power outages during intense heat waves haven’t helped either.
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Bloomberg Business reporter David Pan highlighted on Twitter that Compute North may have been hit by a costly delay at a large mining facility in Texas that was unable to monetize for months.
“Compute North’s massive 280 MW mining facility in TX was supposed to operate rigs in April, but couldn’t due to pending approvals. From then until the end of this year, when he was finally able to power the machines, Bitcoin prices had gone through multiple downward cycles, fundraising opportunities dried up, and major lenders shrank,” he wrote.
Compute North joins a long list of crypto companies that have fallen victim to, or in some cases helped create, the crypto winter, including Voyager Digital, Three Arrows Capital, Celsius Network, and BlockFi, to name a few.