Compute North, one of the largest cryptocurrency mining data center operators, has filed for bankruptcy and announced that its CEO has resigned due to the decline in cryptocurrency prices that has impacted the industry.
The company has filed a Chapter 11 lawsuit in the US Bankruptcy Court for the Southern District of Texas and owes at least 200 creditors up to $500 million, the filing says.
In February, Compute North announced a $385 million funding round consisting of an $85 million Series C funding round and $300 million in debt financing. But it went out of business as miners struggled to survive amid falling bitcoin (BTC) prices, soaring electricity prices, and record-breaking bitcoin mining difficulties. The filing could have negative consequences for the industry. Compute North is the largest data center provider for miners and has several agreements with other major mining companies.
Also Read: Cryptocurrency Miners Face Margin Calls and Defaults as Debt Pays Off in Bear Market
"The Company has entered a voluntary Chapter 11 process to enable it to stabilize its business and undertake a comprehensive restructuring process that will allow us to continue to serve our customers and partners and make the necessary investments to to achieve our strategic goals." A spokesperson told CoinDesk in an emailed statement.
CEO Dave Perrill resigned earlier this month but will continue to serve on the board, the spokesman added. Drake Harvey, who served as chief operating officer last year, has assumed the role of president of Compute North, a spokesman said.
Compute North has four facilities in the United States, according to its website -- two in Texas and one each in South Dakota and Nebraska.
The Company's partners include Marathon Digital (MARA), where Compute North has commissioned 40 megawatts (MW) of its 280-megawatt wind farm in Upton County, West Texas. Compass Mining, a bitcoin mining brokerage and hosting company, recently announced that it will be working with Compute North on a 75 MW hosting partnership for its data center in Granbury, Texas. In a tweet, Compass said it was considering filing for bankruptcy and that Compute North had informed the company that the filing would not affect mining operations.
Marathon also tweeted that the bankruptcy protection filings will not affect its current mining operations and that it is in touch with Compute North.
Meanwhile, on March 7, crypto miner Hive Blockchain (HIVE) signed an agreement with Compute North for 100MW of mining capacity. Marathon shares fell slightly after Thursday's close, while Hive shares were flat.
Other deals signed by Compute North include Singapore-based Atlas Mining, Chinese crypto mining company Thi9, bitcoin miner BitNil Holdings (NILE), BitDigital (BTBT), and Sphere3D (ENIGE). BitNile shares fell about 1% after hours, while Bit Digital rallied sharply.
On July 14, the mining arm of Celsius Networks, which announced in March it would go public, filed with its parent company for Chapter 11 bankruptcy protection in a US court in the Southern District of New York. Meanwhile, on Sept. 13, Pullin Wallet, one of the largest Bitcoin (BTC) pool wallet services, announced it would issue IOU (I Owe You) tokens to affected customers after halting withdrawals the previous week.
Update (September 22, 2022 23:25 UTC): Update with Marathon comments.
Update (September 22, 2022 23:05 UTC): Update with comments from Compass Mining.
Update (September 22, 2022 22:41 UTC): Update with CEO resignation and company comments.