Bitcoin (BTC) mining data center operator Compute North filed for Chapter 11 Bankruptcy, adding that CEO Dave Perrill resigned earlier in September.
The firm reportedly owes $500 million to about 200 creditors and has assets valued between $100 and $500 million.
Compute North filed for bankruptcy on Sept. 22 and will continue operations as it seeks to find solutions to its liquidity problem. Meanwhile, CEO Dave Perrill will remain on the board while chief operating officer Drake Harvey will take over as CEO.
Compute North is one of the biggest data center operators for crypto miners and has partnerships with major miners like Marathon Digital and Compass Mining. It raised $385 million in February — $300 million came from debt financing, while $85 million came from its Series C equity financing.
North Compute faced a declining revenue source
The company saw its fortune tank after a massive market downturn that plunged Bitcoin’s value below $20,000. Additionally, rising energy costs and increasing BTC mining difficulty have made it difficult for miners to stay profitable.
Bloomberg Business Reporter David Pan tweeted that one reason Compute North filed for bankruptcy was the delay in its 280mw mining facility in Texas becoming operational — mainly due to approval issues.
While Compute North’s bankruptcy shows the systemic distress in the Bitcoin mining industry, that is also the result of a mix of idiosyncratic risks. 1) Hosting companies that build data centers to run rigs for miners have to strike a very delicate balance between
— David Pan (@DavidPan_1) September 23, 2022
According to Pan:
“[North Compute]’s bankruptcy indicates increasing distress in Bitcoin mining.”
Compute North partners unaffected
Compute North partners have revealed that the firm’s bankruptcy would not affect their operations.
Bitcoin mining firms — Marathon Digital and Compass Digital — tweeted that the data center operator’s bankruptcy would not impact their mining operations.
Today, a filing related to one of our hosting providers was published. Based on the information available at this time, it is our understanding that this filing will not impact our current mining operations.
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) September 22, 2022
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.
— Compass Mining 🧭 (@compass_mining) September 22, 2022
Compute North is the first crypto mining-related company to file for bankruptcy. Meanwhile, several crypto lenders like Celsius Network, Voyager Digital, and others had earlier filed for bankruptcy.
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Author: Oluwapelumi Adejumo