Bitcoin mining firm Compute North filed for Chapter 11 bankruptcy protection in Texas on September 22, becoming the latest casualty of the prolonged crypto winter. The company had previously partnered with Marathon Digital Holdings (Nasdaq: MARA) to host over 100,000 ASIC miners across multiple data centers.
Details of Compute North's Bankruptcy Filing
According to court documents, Compute North seeks to stabilize operations and repay creditors through a comprehensive restructuring process. Kristyan Mjolsnes, head of marketing and sustainability, stated that the filing allows the firm “the opportunity to stabilize its business and implement a comprehensive restructuring process.” Earlier this year, Compute North raised approximately $410 million in equity and debt funding. However, declining Bitcoin prices—which have dropped over 70% from their November 2021 peak—pushed the company into financial distress. At the end of June, an estimated $4 billion in Bitcoin mining loans were reported to be in trouble.
Notably, in April 2022, Compute North announced plans to build a 300-megawatt data center in Texas, and had signed a hosting agreement with Marathon Digital. Those plans are now in jeopardy due to the bankruptcy.
Marathon Digital Stock Downgraded
BTIG analyst Gregory Lewis downgraded Marathon Digital's stock from “Buy” to “Neutral” following the news, citing that Compute North's filing would “weigh on MARA's ability to grow its hash capacity.” However, Lewis noted that in the long run, the bankruptcy could present an opportunity for Marathon to acquire data center infrastructure at “distressed pricing.” Marathon's shares fell about 5% in after-hours trading.
Marathon's Response: No Impact on Current Operations
Marathon Digital addressed the situation via Twitter: “Today, a filing related to one of our hosting providers was published. Based on the information available at this time, it is our understanding that this filing will not impact our current mining operations. We are in communication with the hosting provider and monitoring their progress.” Nonetheless, if the restructuring fails, Marathon may need to find alternative hosting solutions, potentially delaying its hash rate expansion targets.
The broader crypto mining industry has been hit hard by falling Bitcoin prices and rising energy costs. Previously, several crypto lenders and hedge funds—including Celsius Network and Three Arrows Capital—have filed for bankruptcy.