Bitcoin (BTC) mining hosting company Compute North has filed for Chapter 11 bankruptcy, amid growing pressure on the business from the effects of the crypto winter and rising energy costs. The firm’s CEO, Dave Perrill, has also stepped down but will remain on the board.
Company submitted Sept. 22 Chapter 11 bankruptcy filing in the U.S. Bankruptcy Court for the Southern District of Texas, now being heard by Judge David Jones.
By filing under Chapter 11, the business is still able to keep its operations going as it works out a plan to pay off creditors. Submission supposedly reports that Compute North owes approximately $500 million to 200 creditors, with assets valued between $100 million and $500 million.
Compute North offers extensive hosting services and cryptocurrency mining equipment, hardware and BTC mining pool. It is one of the largest data center providers in the US and has major BTC mining partners such as Compass mining and Marathon Digital.
Both companies issued statements via Twitter, noting that with the information they have at this stage, their business operations will continue as usual.
“Compute North staff informed 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.” he remarked Compass mining.
A filing was published today regarding one of our hosting providers. Based on the information currently available, we believe this filing will not affect our current mining operations.
— Marathon Digital Holdings (NASDAQ: MARA ) (@MarathonDH) September 22, 2022
BTC’s bearish performance in 2022 has 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.
Bloomberg Business reporter David Pan pointed out on Twitter that Compute North may have been affected by the costly delay of a large mining rig in Texas that has been unable to monetize for several months.
“Compute North’s giant 280MW mining facility in TX was scheduled to operate rigs in April, but could not due to pending approvals. Between then and the end of this year, when he was finally able to get the machines up and running, bitcoin prices went through several down cycles, fundraising opportunities dried up, and major lenders backed out,” he wrote.
Compute North joins a long list of crypto firms that have either fallen victim to the crypto winter – or in some cases helped create it – including Voyager Digital, Three Arrows Capital, Celsius Network and BlockFi to name a few.