Bitcoin mining firm Compute North has filed for Chapter 11 bankruptcy

The list of companies that have fallen victim to the recent cryptocurrency downturn grows to include Compute North. This time, it’s not a company that trades in cryptocurrencies and offers financial services with them, which has been the problem for most companies that have recently filed for Chapter 11 or 15 bankruptcy, but a mining company. The firm raised $385 million in capital in February thanks to a $300 million loan and an $85 million investment round. We are talking about the time when Bitcoin fell “only” to about 40 thousand USD and its price was slowly rising, but now the situation is quite different.

There were several negative influences at once, which the company did not stop. The stagnation of the price of Bitcoin and its subsequent slight increase was only temporary, and after April the value of Bitcoin continued downwards, today to about 19 thousand USD. The profitability of mining is mainly determined by two factors, earnings (ie the price of Bitcoin) and costs (primarily the price of energy). And while the former decreases, the latter rises, which is exactly what any business does not want. Added to this were delays in the start-up of a new 280MW mining farm in Texas, which was supposed to start up in April (which would have coincided with a period of mild recovery), but was put into operation later, at the time of another significant slump.

The company thus owes its creditors about $500 million, while Chapter 11 bankruptcy allows the company to continue operating and try to create a plan to pay off creditors and operate more efficiently. Company CEO Dave Perrill has stepped down, but will remain at the helm of the company. Major partners of the company are, for example, the companies Compass Mining and Marathon Digital, which have already made it known that their operation will continue as before.


Source: Svět hardware by www.svethardware.cz.

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