Tech

Compass Mining loses facility after allegedly failing to pay power bill

06/28/2022
Bitcoin Ethereum News

Bitcoin (BTC) mining hardware and hosting company Compass Mining has lost one of its Maine-based hosting facilities after the owner, Dynamics Mining, terminated the hosting agreement between the two, claiming Compass failed to pay the required bills.

Late on Sunday, Dynamics tweeted a letter on Twitter it sent to Compass Mining which stated as of June 14th, the hosting contract between the two was terminated. Dynamics alleged Compass has six late payments and three non-payments related to utility bills and hosting fees.

In a follow-up tweet a few hours later, on Monday, Dynamics alleged the power consumption bills totaled $1.2 million, and Compass had only paid around $665,000. It said Compass claims to have given the money required for the bills, but Dynamics alleged it was used to build other facilities instead.

The very public situation caused Compass Mining CEO Whit Gibbs to tweet it would “fight this battle in court, not on Twitter.” The tweet has since been deleted.

But the individual behind the Dynamics account hit back at Gibbs, saying that all Compass had to do “was pay $250k for three months of power consumption” and that “Twitter is the voice of your customer base, not the courtroom.”

A spokesperson for Compass Mining said to Cointelegraph that the statements from Dynamics Mining “are absolutely incorrect” and it would be issuing a statement shortly.

On June 28 Compass announced Gibbs and Chief Finance Officer Jodie Fisher had resigned “effective immediately”, adding:

“Compass Mining was created to make mining easy and accessible. We recognize that there have been multiple setbacks and disappointments that have detracted from that objective. Through this restructuring, the company is wholly focused on regaining the goodwill of our stakeholders and the community.”

Chief Technology Officer Paul Gosker and Chief Mining Officer Thomas Heller were appointed as interim Co-Presidents and CEOs. Compass added it will begin a search for a permanent CEO and CFO immediately. It is unclear if Gibbs and Fishers resignations are a direct result of the situation with Dynamics Mining.

Cointelegraph contacted Dynamics Mining for comment but did not receive a response by publication time.

Compass Mining sells Application Specific Integrated Circuit (ASIC) miners, specialized cryptocurrency mining devices, which come with an option to be hosted in its facilities located across the United States and Canada. It is unknown what will happen to customer miners located at the facility.

Compass states that in the event of an emergency, it may “rearrange, remove, or relocate Customer Hardware without any liability to Compass” according to its hosting agreement.

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The terms also see customers “waive their rights to seek remedies in court” or be involved in any Class Action lawsuits, and any proceedings must be bought forward by each individual customer if they were to file a lawsuit against Compass.

The situation comes when many cryptocurrency miners face a challenging market environment with the continuing price slide of Bitcoin and increasing energy costs.

In mid-June, when Bitcoin fell below $24,000, the profitability of many of the older ASIC miners dropped into the negative zone, and even some of the newer generation mining rigs are near or past their shutdown thresholds based on the price of the asset.

Around the same time, with Bitcoin mining profitability dropping over 75% from the market top, the volume of BTC sent by miners to crypto exchanges reached a seven-month high on June 15. Several public Bitcoin mining firms sold 100% of their Bitcoin production in May, according to reports.

Update June 28: Added the deletion of Whit Gibbs tweet, included the response from Compass Mining to a request for comment, added announcement that Gibbs and Chief Finance Officer Jodie Fisher had resigned along with a quote from the announcement.