Crypto-Mining Data Center Compute North Files for Bankruptcy, CEO Steps

Compute North, one of the largest operators of crypto-mining data centers, has filed for bankruptcy and revealed that its CEO has stepped down as the trend in cryptocurrency prices is weighing on the industry.

The company filed for Chapter 11 in the US Bankruptcy Court for the Southern District of Texas, according to filings.

Compute North announced in February a capital raise of $385 million, which included a Series C equity round of $85 million and $300 million in debt financing. But it fell into bankruptcy as miners struggled to survive amid slumping bitcoin (BTC) prices, rising power costs and record difficulty in mining bitcoin. The filing is likely to have negative implications for the industry. Compute North is one of the largest data center providers for miners, and has multiple deals with other larger mining companies.

Read more: Crypto Miners Face Margin Calls, Default as Debt Due in Bear Market

“The Company has initiated voluntary Chapter 11 proceedings to allow the company to stabilize its business and implement a comprehensive restructuring process that will enable us to continue serving our customers and partners and make the necessary investments to achieve our strategic objectives,” a spokesperson told CoinDesk in an emailed statement.

CEO Dave Perrill resigned earlier this month but will continue to serve on the board, the spokesman said. Drake Harvey, who has been chief operating officer for the past year, has assumed the role of president at Compute North, the spokeswoman said.

Compute North has four facilities in the U.S. — two in Texas and one each in South Dakota and Nebraska, according to its website.

Some of the company’s partners include Marathon Digital (MARA), where Compute North has brought online 40 megawatts (MW) of a 280MW wind facility at Upton County in West Texas. Bitcoin mining brokerage and hosting services firm Compass Mining recently said it will work with Compute North on a 75MW hosting partnership for its Granbury, Texas data center. Compass said in a Tweet that its review of the bankruptcy petitions and Compute North informed the company that the filing should not affect mining operations.

A marathon too tweeted that the bankruptcy protection filings will not affect its current mining operations and communications with Compute North.

Meanwhile, crypto miner Hive Blockchain (HIVE) also entered into an agreement with Compute North on March 7, for 100MW mining capacity. Marathon shares were down slightly in after-market trading on Thursday, while Hive was unchanged.

Additional deals signed by Compute North included Singapore-based Atlas Mining, Chinese Crypto Miner The9, bitcoin miner BitNile Holdings (NILE), Bit Digital (BTBT) and Sphere 3D (ANY). BitNile shares were down about 1% in after-hours trading, while Bit Digital rose slightly.

On July 14, the Celsius Network mining unit, which said in March it planned to go public, filed for Chapter 11 bankruptcy protection, along with its parent company, in the US Bankruptcy Court for the Southern District of New York. Meanwhile, Poolin Wallet, a wallet service of one of the largest bitcoin (BTC) mining pools, announced on September 13 that it will issue IOU (I Owe You) tokens to affected customers after freeze withdrawals the previous week.

Update (September 22, 2022 23:25 UTC): Updates with Marathon comments.

Update (September 22, 2022 23:05 UTC): Updates with Compass Mining comments.

Update (September 22, 2022 22:41 UTC): Updates with the CEO event and company comments.

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