Crypto mining data center company Compute North is the latest casualty in the ongoing harsh crypto winter that has of late forced some of the biggest crypto companies to close shop.
Compute North filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Texas on Friday, citing mounting pressure on its operations from increased energy costs, the present market turbulence, and headwinds and supply-chain bottlenecks.
By voluntarily declaring unable to pay its bills and filing for Chapter 11 bankruptcy, the Minnesota-based Compute North buys itself time to reconstruct while maintaining its operations in the expectation of becoming lucrative.
Compute North Caves In: $500 Million Due
According to the document, the company owes at least 200 creditors a total of $500 million. Based on records, the firm estimates that its assets are worth between $100 million and $500 million.
Compute North provides hosting services and infrastructure for large-scale crypto mining, as well as hardware and a Bitcoin mining pool. It is one of the top U.S. data center providers and has notable crypto mining collaborators, including Marathon Digital and Compass Mining, Hive Blockchain, Bit Digital, and Chinese miner The9.
Compute North’s filing comes at a time when the White House is considering a prohibition on proof-of-work (PoW) mining, following the release of a study by the Science and Technology Policy (STP) on Friday. The research recommended for less water consumption, quieter mining equipment, and transparent energy utilization.
In 2017, the company began as a cryptocurrency mining operation before transitioning to hosting services for other mining companies. Due to local constraints, it had delays in building a huge mining operation in Texas earlier this year, which likely hampered its capacity to produce revenues.
Compute North Defaulted, Generate Says
According to a Bloomberg report, the company’s decision to file for Chapter 11 bankruptcy was mostly influenced by the activities of its key lender, Generate Lending LLC, a Generate Capital affiliate.
Harold Coulby, chief financial officer and treasurer of Compute North, stated that Generate seized key assets being constructed by Compute North after the lender accused the data center company of defaulting on certain technical terms of its loan agreement.
“Compute North’s loss of control over the Generate Entities contributed to business difficulties preceding the filing of these Chapter 11 proceedings,” Coulby wrote in his declaration, referring to the lender’s acquisition of the company’s assets.
The decrease in bitcoin prices exacerbated Compute North’s already constrained liquidity. Coulby said that the company deposited $31 million in 2021 and $41.5 million this year for fixed assets such as generators whose delivery is lengthy.
Bitcoin is trading at $19,085 as of this writing, a decrease of 3.5% in the last seven days, according to Coingecko data from Saturday.