The recent crypto winter did come quite harsh for the broader crypto market which evidently impacted cryptocurrencies and related operations. It was very much likely to affect crypto and bitcoin mining businesses and so it did. One of the prominent miners, Compute North, filed for Chapter 11 bankruptcy. Given the industry’s interconnected formation, the fall of one ends up affecting others.
Bitcoin Miner’s Funds Stuck with Compute North
One among the largest bitcoin miners in terms of trading publicly, Marathon Digital recently reported to put up an expectation of recovering less than half of its deposit from Compute North. The latter acted as a data center provider along with being a prominent bitcoin miner. It held 50 million USD worth deposits from Marathon Digital, out of which the miner expects to receive only 22 million USD.
Marathon is dependent upon Compute North since the miner does not have any mining facility. It uses data centers from third party service providers and sets up its systems. Earlier it had said to pay about 50 million to Compute North as operating deposits.
On Tuesday, 6th December 2022, the bitcoin miner said that it has written off about 8 million until now. And out of the remaining 42 million USD, the company expects to recover about 22 million USD. This indicates the possibility of remaining 20 million USD to be written as lost amount. Marathon, however, ensured to work with involved entities and said to continue its effort to recover the rest amount.
Compute North Serving Marathon Digital
The Minnesota state based Compute North went on to file for bankruptcy under the Chapter 11 Bankruptcy Code. The severe bear market, issues related to supply and lender troubles resulted in the company ending up in a beleaguered situation.
Compute North has a list of customers and Marathon Digital topped the list. The latter had placed its bitcoin mining rigs in the data centers of the former in exchange for a significant fee.
In addition to the deposits, Marathon had other investments in the mining service provider firm. It invested 10 million USD and 21.3 million USD in convertible preferred stock and an unsecured senior promissory note.
Following the mining of 472 bitcoins in November, Marathon said that as of Nov. 30 it had 4,200 unconstrained bitcoin and 11,757 total bitcoin, reducing their revolver borrowings from $50 million to $30 million. Due to higher energy costs and lower bitcoin prices that hurt its King Mountain location in Texas, the 472 bitcoin mined in November were 23% less than in October.
In keeping with its mining peer group, Marathon shares remained flat in post-market trade on Tuesday but were down 5.7% during the regular session, dropping 82% so far this year.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2022/12/07/bitcoin-mining-sector-struggle-continues-marathon-unable-to-recover-deposit/