THE LATEST VICTIM OF THE CRYPTO WINTER: COMPUTE NORTH ASKED FOR BANKRUPTCY

The American hosting provider Compute North, which provides cryptocurrency mining services, has appealed to a Texas court with a request to restructure its debt. The firm reported that it has assets worth more than $ 100 million, however, its debt to creditors is about $ 500 million. Chapter 11 of the US Bankruptcy Code, under which the appeal was filed, will allow the organization to continue its work.

The company was founded in 2017. To date, it owns two large data centers in Texas, as well as one each in South Dakota and Nebraska. In February 2022, the company announced that it intends to attract about $385 million of investments, of which about $300 million will be received as a loan, and a series of securities will be issued for the rest.

However, the beginning of the crypto winter, caused by a sharp drop in bitcoin prices, rising electricity prices and the complication of digital currency mining, pushed back the company's plans.

According to experts, the bankruptcy of Compute North can have very negative consequences for the entire industry. The firm was not only the largest provider for potential miners, but also signed many contracts with other companies working with cryptocurrency.

The firm continues to cooperate with such leaders of the bitcoin mining industry as Marathon Digital (MARA), Hive Blockchain (HIVE) and Compass Mining. In cooperation with MARA, it previously commissioned 40 megawatt equipment operating as part of a 280 megawatt wind farm.

Compass Mining, which provides brokerage and hosting services for bitcoin mining, announced plans to continue cooperation within the framework of servicing a data center in Texas with a capacity of 75 megawatts. At the same time, the company itself said that it is also thinking about filing for bankruptcy.

Another major partner, represented by HIVE, also signed a deal with Compute North in March 2022, providing for the maintenance of a mining farm with a capacity of 100 megawatts. But now the firm is thinking of abandoning the deal, having seen significant risks to work in Texas, given the increased cost of electricity.

Amid the bankruptcy of Compute North, CEO Dave Perrill was dismissed. It is reported that Drake Harvey, who previously worked as an operating director, took his place. At the same time, Dave Perrill remains on the board of directors.

According to experts, Compute North is far from the first mining company to find itself in a financial crisis due to the fall of the crypto market. Back in June, Compass Mining had to lay off about 15% of its employees, halving the salary of management. 

In August, Stronghold Digital Mining Corporation managed to write off debts in the amount of $67.4 million, which agreed to exchange it for crypto mining equipment. After the bankruptcy of the crypto broker Voyager Digital, the crypto lender Celsius Network and the hedge fund Three Arrows Capital, experts call the insolvency application of Compute North the last major bankruptcy of the crypto winter.

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