Bitcoin (BTC) mining company Compute North has filed for Chapter 11 bankruptcy amid mounting pressure on the firm from the effects of the crypto winter and rising energy prices. The firm’s CEO Dave Perrill also stepped down, but will remain on the board.
On September 22, the company filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, which is currently pending before Judge David Jones.
Under Chapter 11, the firm can still continue to operate by developing a plan to repay the debt to creditors. The document reportedly indicated that Compute North owes about $500 million to 200 creditors, while its assets are estimated at $100 million to $500 million.
Compute North offers large-scale cryptocurrency mining hosting services, hardware, and BTC mining pool. It is one of the largest data center providers in the US and has well-known partners in the BTC mining sector such as Compass Mining and Marathon Digital.
Both companies issued statements via Twitter, noting that with the information they have at this stage, their business operations will continue as normal.
“Compute North staff told us today that filing for bankruptcy should not disrupt business operations. We continue to monitor the situation and will provide further updates as they become available,” said Compass Mining.
An application related to one of our hosting providers was published today. Based on information currently available, we understand that this application will not impact our current mining operations.
— Marathon Digital Holdings (NASDAQ: MARA) (@MarathonDH) September 22, 2022
BTC’s bearish performance in 2022 has had a significant impact on the mining sector this year, and in the context of Texas, rising energy prices and multiple power outages during a heat wave have not helped either.
Related: Maple Finance Launches $300M Lending Pool for Bitcoin Mining Firms
Bloomberg Business reporter David Peng highlighted on Twitter that Compute North may have been impacted by the costly delay of a large mining facility in Texas that it has been unable to monetize for months.
“The massive 280 MW Compute North mining facility in Texas was supposed to have rigs up and running in April, but was unable to due to pending approvals. From then until the end of this year, when he was finally able to activate the machines, bitcoin prices went through several cycles of decline, fundraising opportunities dried up, and major lenders cut back,” he wrote.
Compute North joins the long list of crypto firms that have either fallen victim to the crypto winter or in some cases helped create it, including Voyager Digital, Three Arrows Capital, Celsius Network and BlockFi, just to name a few.