Bitcoin (BTC) mining hosting company Compute North has filed for Chapter 11 bankruptcy as the company faces increasing pressure from the impact of the crypto winter and rising energy costs. The company’s CEO, Dave Perrill, has also resigned but remains on the board.
The company filed a Chapter 11 bankruptcy petition 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 firm is still able to continue in business while it works out a plan to repay creditors. The filing reportedly details that Compute North owes around $500 million to 200 creditors, while its assets are said to be worth between $100 million and $500 million.
Compute North offers hosting services and facilities for large-scale crypto mining, hardware, and a BTC mining pool. It is one of the largest data center providers in the US and has well-known partners in the BTC mining sector such as Compass Mining and Marathon Digital.
Both companies have issued statements via Twitter, indicating that with the information they have at this time, their operations are continuing as normal.
“Compute North employees have advised 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.” written down compass mining.
A message was published today relating to one of our hosting providers. Based on the information available at this time, we believe this filing will have no impact on our current mining operations.
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) September 22, 2022
BTC’s bearish trend in 2022 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 didn’t help either.
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Bloomberg Business reporter David Pan stressed on Twitter that Compute North may have been hit by a costly delay at a major mining facility in Texas that failed to monetize for months.
“Compute North’s massive 280 MW mining facility in TX was scheduled to operate drilling rigs in April but was unable to due to pending permits. From then until later this year when it was finally able to power the machines, bitcoin prices had undergone multiple down cycles, funding opportunities dried up and major lenders were scaled back,” he wrote.
Compute North joins a long list of crypto firms that either fell 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.