Bitcoin mining company Compute North filed for Chapter 11 bankruptcy protection in Texas on Thursday as crypto winter continues to put pressure on crypto mining operations. The bankruptcy petition filed on September 22 indicates the company will stabilize to pay its creditors.
Compute North Files for Chapter 11 Bankruptcy Protection
Five months ago last April, Compute North disclosure the company is building a 300 megawatt (MW) data center in Texas. A few months earlier in late 2021, Compute North signed an agreement with Marathon Digital Holdings (Nasdaq: MARA) and two companies planned hosts more than 100,000 application-specific integrated circuit (ASIC) miners in data centers around the country.
Recently Chapter 11 bankruptcy protection file now shows that Compute North is solving financial problems. Speaking with Steven Church and David Pan from Bloomberg, Compute North’s head of sustainability and marketing Kristyan Mjolsnes explained that the company is looking to stabilize operations.
Compute North was looking for “opportunities to stabilize the business and undertake a full restructuring,” said Mjolsnes. “[It] will allow us to continue to serve our customers and partners and make the investments necessary to achieve our strategic goals,” the company’s chief executive explained.
The bankruptcy filing follows the company raising about $410 million in equity and debt financing this year. Furthermore, Compute North has had to deal with a drop in bitcoin (BTC) price and at the end of June it is speak $4 billion in bitcoin mining loans crashed. Falling bitcoin and crypto asset prices have led to several bankruptcies stemming from digital currency lenders and supported cryptocurrencies investment funds.
MARA shares downgraded due to Compute North’s recent bankruptcy filing, Marathon says Compute North’s restructuring ‘will not affect current mining’
Compute North’s bankruptcy hit Marathon Digital’s stock after BTIG analyst Gregory Lewis decided downgrade equity. Lewis said that Compute North’s recent filing will “affect MARA’s ability to grow its hash capacity. In the long run, however, the bankruptcy of Compute North could provide an opportunity for MARA to build data center infrastructure at a tough price.” Marathon Digital also took to Twitter to discuss its recent bankruptcy filing.
“Today, a profile regarding one of our hosting providers was published,” Marathon Digital tweeted. “Based on the information available at this time, we understand that this filing will not affect our existing mining operations. We are communicating with the hosting provider and monitoring their progress as they work on the process,” the bitcoin miner added.
What do you think about Compute North filing for bankruptcy and Marathon stock dropping? Let us know your thoughts on this topic in the comments section below.
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