Compute North files for bankruptcy

The mining company and provider of infrastructure solutions for cloud mining Compute North подала заявление о банкротстве. Its liabilities to 200 counterparties are estimated at $500 million, and assets range from $100 million to $500 million.

CEO Dave Perrill resigned but remains on the board.

The firm is drafting a plan to restructure its operations.

Compute North cited the ongoing bear market and rising energy costs as the reason for the decision.

Marathon Digital, the company that uses Compute North’s infrastructure, said it continues to operate normally.

Today, a filing related to one of our hosting providers was published. Based on the information available at this time, it is our understanding that this filing will not impact our current mining operations.

— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) September 22, 2022

A similar statement was issued by Compass Mining.

Compute North’s staff informed us today that the bankruptcy filing should not disrupt business operations. We are continuing to monitor the situation and will provide further updates as they become available.

— Compass Mining 🧭 (@compass_mining) September 22, 2022

Analyst David Pan of Bloomberg suggested that Compute North’s problems arose from delays in government approval for the launch of a 280 MW data centre in Texas. The filing was submitted in April. The company obtained the permit amid worsening market conditions and reduced access to capital markets.

Bitcoin prices had gone through multiple downward cycles, fundraising opportunities dried up and major lenders scaled back. 3) While I am not sure the details on how exactly this facility uses wind to generate power, wind in general is not the most stable source of power unless

— David Pan (@DavidPan_1) September 23, 2022

In July 2021 Compute North announced the expansion of data-center capacity to 1.2 GW with the construction of five new facilities. At that time the company operated three facilities in Texas, Nebraska and South Dakota with a combined capacity of 100 MW.

In February 2022, Compute North raised $385 million to expand its mining infrastructure in the United States.

In April, Arcane Research analysts noted that the fall in Bitcoin’s price and rising hash rate will put pressure on the profitability of cryptocurrency mining.

In June, experts noted that mining profitability had fallen to 2020 levels.

Some companies were forced to cut Bitcoin reserves. In July the trend continued. The heat in Texas exacerbated the situation, driving peak electricity demand and price spikes, forcing companies to temporarily halt operations.

In September, Arcane Research concluded that despite adverse market conditions, public companies in the industry remain financially sound.

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