Compute North, the bitcoin mining company, filed Chapter 11 bankruptcy protection in Texas Thursday. The crypto winter is continuing to place pressure on crypto mining operations. This bankruptcy petition was filed September 22nd and indicates that the company is seeking to stabilize operations in order repay creditors.
Compute North Files to Protect Chapter 11 Bankruptcy Protection
Compute North disclosed that the company had built a 300MW (MW) Texas data center five months prior to April. Compute North signed an agreement with Marathon Digital Holdings, Nasdaq: MARA at the end 2021. These two companies were planning to host more that 100,000 ASIC (application-specific integrated circuit) miners in various data centers throughout the country.
Compute North has been filing Chapter 11 bankruptcy protection papers. This shows that the company is currently dealing with financial problems. Speaking with Steven Church and David Pan from Bloomberg, Kristyan Mjolsnes, head of Compute North’s marketing and sustainability team explained that the firm looks to stabilize operations.
Compute North seeks “the opportunity to stabilize its business and implement a comprehensive restructuring process,” Mjolsnes said. “[It] will enable us to continue servicing our customers and partners and make the necessary investments to achieve our strategic objectives,” the company’s executive explained.
Compute North raised approximately $410 million this year in debt and equity funding. Compute North was also faced with the fall in Bitcoin (BTC), and it was estimated that at June’s end, $4 billion worth of bitcoin mining loans had been in financial distress. Falling bitcoin and crypto asset prices have triggered a number of bankruptcies stemming from digital currency lenders and cryptocurrency-backed hedge funds.
MARA Stock Downgraded Over Compute North’s Recent Bankruptcy Filing, Marathon Says Compute North’s Restructuring ‘Will Not Impact Current Mining Operations’
Compute North’s bankruptcy has affected Marathon Digital’s stock after BTIG analyst Gregory Lewis decided to downgrade the equity. Lewis said that Compute North’s recent filing will “weigh on MARA’s ability to grow its hash capacity. However, longer term, the bankruptcy of Compute North could provide an opportunity for MARA to build a data center infrastructure footprint at distressed pricing.” Marathon Digital also took to Twitter to discuss the recent bankruptcy filing.
“Today, a filing related to one of our hosting providers was published,” Marathon Digital tweeted. “Based on the information available at this time, it is our understanding that this filing will not impact our current mining operations. We are in communication with the hosting provider and monitoring their progress as they work through this process,” the bitcoin mining firm added.
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