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mining companies are struggling

Bytomasian

Sep 23, 2022

Compute North, a cryptocurrency mining infrastructure solution company, filed for bankruptcy with the court. The CEO of the company has also resigned. Analysts say that the collapse of the mining industry could accelerate while a number of mining companies are struggling in the winter of cryptocurrency.

According to CoinDesk on the 22nd (local time), Compute North filed for bankruptcy protection under Article 11 of the Bankruptcy Act at the Southern Bankruptcy Court in Texas.

Article 11 of the Bankruptcy Act is a system that seeks rehabilitation by conducting restructuring procedures under court supervision and is similar to domestic court management.

Compute North earlier announced in February that it had raised $385 million (about 540 billion won). However, the profitability of the mining business plunged as Bitcoin prices fell and power costs and mining difficulties rose.

Chief executive Dave Perrill resigned earlier this month, according to a company spokesman. Drake Harvey, who served as the company’s chief operating officer, will take the position.

“We have voluntarily started Chapter 11 procedures to continue to serve our customers and stabilize our business,” a spokesman told CoinDesk.

According to the company’s website, Compute North currently has four data facilities: Texas, South Dakota, and Nebraska. It also provides services to a number of mining companies such as Marathon Digital, Compass Mining, and Hive Blockchain.

Coinesk predicted that the bankruptcy could have a negative impact on the cryptocurrency industry, considering the size and transaction status of Compute North.

Meanwhile, mining companies are having difficulty operating their businesses due to falling cryptocurrency prices and rising energy prices. Mining companies are cutting staff one after another to reduce operating costs by a sharp drop in profits.

Some analysts say that mining companies will attempt mergers and acquisitions to find a way out. Amanda Fabiano, head of the Galaxy digital mining field, predicted that mergers and acquisitions (M&A) could occur within the second half of this year.

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