Bitcoin mining firm Compute North filed for Chapter 11 bankruptcy protection in Texas on Thursday as the crypto winter continues to put pressure on crypto mining operations. The bankruptcy petition filed on September 22, indicates the company looks to stabilize operations in order to repay creditors.
Compute North Files for Chapter 11 Bankruptcy Protection
Five months ago last April, Compute North revealed the company was building a 300 megawatt (MW) data center in Texas. Months before that at the end of 2021, Compute North entered a deal with Marathon Digital Holdings (Nasdaq: MARA) and the two firms planned to host more than 100,000 application-specific integrated circuit (ASIC) miners in data centers around the country.
Recent Chapter 11 bankruptcy protection filings now show Compute North is dealing with financial issues. Speaking with Steven Church and David Pan from Bloomberg, Kristyan Mjolsnes, head of Compute North’s marketing and sustainability team explained that the firm looks to stabilize operations.
Compute North seeks “the opportunity to stabilize its business and implement a comprehensive restructuring process,” Mjolsnes said. “[It] will enable us to continue servicing our customers and partners and make the necessary investments to achieve our strategic objectives,” the company’s executive explained.
The bankruptcy filing follows the company raising roughly $410 million in equity and debt funding this year. Furthermore, Compute North has had to deal with falling bitcoin (BTC) prices and at the end of June it was said that $4 billion in bitcoin mining loans were in distress. Falling bitcoin and crypto asset prices have triggered a number of bankruptcies stemming from digital currency lenders and cryptocurrency-backed hedge funds.
MARA Stock Downgraded Over Compute North’s Recent Bankruptcy Filing, Marathon Says Compute North’s Restructuring ‘Will Not Impact Current Mining Operations’
Compute North’s bankruptcy has affected Marathon Digital’s stock after BTIG analyst Gregory Lewis decided to downgrade the equity. Lewis said that Compute North’s recent filing will “weigh on MARA’s ability to grow its hash capacity. However, longer term, the bankruptcy of Compute North could provide an opportunity for MARA to build a data center infrastructure footprint at distressed pricing.” Marathon Digital also took to Twitter to discuss the recent bankruptcy filing.
“Today, a filing related to one of our hosting providers was published,” Marathon Digital tweeted. “Based on the information available at this time, it is our understanding that this filing will not impact our current mining operations. We are in communication with the hosting provider and monitoring their progress as they work through this process,” the bitcoin mining firm added.
What do you think about Compute North’s bankruptcy filing and Marathon’s stock getting downgraded? Let us know what you think about this subject in the comments section below.
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