US-based bitcoin miner Marathon Digital Holdings Inc. has more than $80 million in exposure to one of its hosting providers, Compute North.
Two weeks ago, the latter joined the list of troubled entities affected by the ongoing crypto winter, filing for Chapter 11 bankruptcy.
Multimillion dollar exhibition
According to a Bloomberg coverage, the cryptocurrency miner had invested $10 million in Compute North convertible preferred stock. It had allocated an additional $21.3 million to a senior unsecured note on numerous entities of the bankrupt company.
Marathon Digital had also paid about $50 million in operating deposits to Compute North for the services provided, increasing the total exposure to more than $80 million.
The data center installed and hosted over 68,000 Marathon bitcoin mining machines at its Texas wind facility over the past three months. However, due to regulatory issues, the company was unable to fire up 40,000 of these units.
Compute North is among the largest cryptomining infrastructure providers. Its facilities extend to numerous destinations in the United States, including Texas, Nebraska and South Dakota.
However, the current bear market crippled its operations. Last month, the company disclosed that it owes approximately $500 million to at least 200 creditors, while its assets are worth between $100 million and $500 million.
To continue operations, Compute North filed for Chapter 11 bankruptcy, which did not result in closing its businesses. Instead, it helps the debtor to reorganize its structure and deal with problems under judicial protection.
The Marathon Digital team said it may move some of its mining infrastructure to other regions if issues with Compute North continue to disrupt its business:
“While we expect operations to continue as originally planned, our asset-light model gives us the option to relocate our miners, if necessary.”
BTC miners in trouble
The fall in the cryptocurrency market and the global economic crisis have negatively affected numerous companies in the bitcoin mining niche.
One such example is Compass Mining, based in the United States. In June, it announced the departure of chief executive Whit Gibbs and chief financial officer Jodie Fisher due to “multiple setbacks” and disappointing performance.
A week later, Compass Mining laid off 15% of its total workforce as part of cost-cutting measures.
Publicly traded Stronghold Digital Mining (SDIG) also experienced problems. In August, it returned 26,200 bitcoin mining rigs to New York Digital Investment Group (NYDIG) to reduce its outstanding debt of $67.4 million.
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