The Minnesota-based company, which reportedly owes $500 to creditors, filed the Chapter 11 bankruptcy in the US Bankruptcy Court for the Southern District of Texas. The voluntary filing was submitted on Thursday, 22 September 2022.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
Compute North files for bankruptcy
The bankruptcy filing for one of the largest data center operators in the crypto sector comes as the broader cryptocurrency market continues to battle with a crypto winter that has prices of digital assets battered.
Amid the market downturn, crypto mining companies that have in the past been top BTC hodlers, have sold to meet their day-to-day cash obligations. For these companies, falling crypto prices combined with escalating power costs and impacts of operational delays have been bad for business.
Marathon Digital (MARA), one of the leading Bitcoin mining firms with a hosting deal with Compute North, said it’s monitoring the situation. However, it is believed the filing won’t affect current activities.
“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.”
Compass Mining, which provides hosting and brokerage services, also tweeted that its legal team was reviewing the bankruptcy filing. But just as Marathon, Compass is of the understanding that the petition won’t impact its mining operations.
Costly delays at Compute North’s Texas facility?
Compute North launched its operations in 2017, starting off as a crypto mining firm before rehashing its business to offer co-location and brokerage services – particularly providing low-cost power access for data centers.
In April this year, the company opened a massive co-location mining facility in Texas. But its operations were delayed due to regulatory hurdles.
David Pan, a Bloomberg Business reporter says this phase of the company’s growth may have been the first step towards the bankruptcy filing. He tweeted:
“Compute North’s massive 280mw mining facility in TX was supposed to run rigs in April but it couldn’t due to pending approvals. From then to later this year when it finally was able to energize the machines, Bitcoin prices had gone through multiple downward cycles, fundraising opportunities dried up and major lenders scaled back.”
Invest in the top cryptocurrencies quickly & easily with the worlds largest and most trusted broker, eToro.
68% of retail CFD accounts lose money
Credit: invezz.com – Source link