Compute North, one of the largest operators of crypto-mining data centers, filed for bankruptcy and revealed that its CEO stepped down as the rout in cryptocurrency prices weighs on the industry.
The company filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas and owed as much as $500 million to at least 200 creditors, according to a filing.
Compute North in February announced a capital raise of $385 million, consisting of an $85 million Series C equity round and $300 million in debt financing. But it fell into bankruptcy as miners struggle to survive amid slumping bitcoin (BTC) prices, rising power costs and record difficulty in mining bitcoin. The filing is likely to have negative implications for the industry. Compute North is one of the largest data center providers for miners, and has multiple deals with other larger mining companies.
“The Company has initiated voluntary Chapter 11 proceedings to provide the company with the opportunity to stabilize its business and implement a comprehensive restructuring process that will enable us to continue servicing our customers and partners and make the necessary investments to achieve our strategic objectives,” a spokesperson told CoinDesk in an emailed statement.
CEO Dave Perrill stepped down earlier this month but will continue to serve on the board, the spokesperson added. Drake Harvey, who has been chief operating officer for the last year, has taken the role of president at Compute North, the spokesperson said.
Compute North has four facilities in the U.S. – two in Texas and one in both South Dakota and Nebraska, according to its website.
Some of the company’s partners include Marathon Digital (MARA), where Compute North has brought online 40 megawatts (MW) of a 280MW wind-powered facility at its Upton County in West Texas. Bitcoin mining hosting and brokerage services firm Compass Mining also said recently that it will work with Compute North on a 75MW hosting partnership for its Granbury, Texas, data center. Compass said in a tweet that it’s reviewing the bankruptcy petitions and Compute North has informed the company that the filing shouldn’t disrupt mining operations.
Marathon also tweeted that the bankruptcy protection filings won’t affect its current mining operations and its in communication with Compute North.
Meanwhile, crypto miner Hive Blockchain (HIVE) also entered into a deal with Compute North on March 7, for 100MW worth of mining capacity. Shares of Marathon were down slightly in post-market trading on Thursday, while Hive remained unchanged.
Additional deals that Compute North signed included Singapore-based Atlas Mining, Chinese Crypto Miner The9, bitcoin miner BitNile Holdings (NILE), Bit Digital (BTBT) and Sphere 3D (ANY). Shares of BitNile was down about 1% in after-hours trading, while Bit Digital rose slightly.
On July 14, Celsius Network’s mining unit, which said in March it planned to go public, also filed for Chapter 11 bankruptcy protection, along with its parent company, in the U.S. Bankruptcy Court for the Southern District of New York. Meanwhile, Poolin Wallet, the wallet service of one of the largest bitcoin (BTC) mining pools, has announced on Sept. 13 it will issue IOU (I Owe You) tokens to affected customers after it froze withdrawals prior week.
UPDATE (Sept. 22, 2022 23:25 UTC): Updates with Marathon’s comments.
UPDATE (Sept. 22, 2022 23:05 UTC): Updates with Compass Mining’s comments.
UPDATE (Sept. 22, 2022 22:41 UTC): Updates with CEO exit and company comments.