Compute North, the Eden Prairie-based provider of cryptocurrency mining infrastructure, on Thursday filed for Chapter 11 bankruptcy in a Texas court.
In a filing in U.S. Bankruptcy Court for the Southern District of Texas, the company reported that it owes up to $500 million to at least 200 creditors. Compute North, which announced a whopping $385 million raise earlier this year, pins the blame on falling cryptocurrency prices and other “adverse market conditions.”
In a statement to the court, CFO Barry Coulby said that “a confluence of events has created a liquidity crisis that has severely impeded Compute North’s ability to complete the development of several new facilities.”
“In particular, cryptocurrency prices have collapsed – bitcoin prices recently hit lows that were almost 75% below its all-time highs in late 2021 – while the rates charged for the electricity required to mine bitcoin have essentially doubled over the past year,” Coulby wrote.
In an email, Compute North spokeswoman Kristyan Mjolsnes said that the voluntary bankruptcy filing will provide the company with “the opportunity to stabilize its business and implement a comprehensive restructuring process that will enable us to continue servicing our customers and partners and make the necessary investments to achieve our strategic objectives.”
She continued: “To implement the restructuring, the Company and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.”
Compute North is based in Eden Prairie, but all of its data centers are located in other states. The company operates facilities in Texas, South Dakota, and Nebraska. The company’s data centers provide infrastructure needed to mine cryptocurrency.
Crypto news site CoinDesk, which first reported news of the bankruptcy on Thursday, said that the filing is “likely to have negative implications for the industry.” The website also reported that Compute North CEO Dave Perrill has stepped down, though he will continue to serve on the company’s board. Chief operating officer Drake Harvey has taken his place as CEO, according to CoinDesk.
Over the summer, Perrill had been named a winner in Heartland division of EY’s Entrepreneur of the Year program. That put him in the running for the national iteration of the program, though it’s unclear if he’s still eligible.
Mjolsnes confirmed that Perrill has stepped down as CEO but remains on the board.