Marathon Digital Holdings Inc. revealed on Thursday that it has more than $80 million of exposure crypto mining data centre firm Compute North Holdings Inc. Compute North Holdings Inc filed for bankruptcy protection in U.S. Bankruptcy Court, Southern District of Texas.
Marathon holds approximately $10 million of Compute North’s convertible preferred stock and $21.3million in Compute North’s unsecured senior promissory notes.
Marathon, which agreed to use Compute North’s data centers to store its computers for mining purposes said that it also paid Compute North about $50 million in operating funds. Marathon said that these deposits were mostly related to security deposits or prepayments associated in the operation of Compute North’s King Mountain and Wolf Hollow Texas mining facilities.
Marathon also installed 40,000 mining machines in According to Compute North’s second quarter earnings, McCamey is Texas’ wind-powered facility. Marathon stated that it began expanding hosting arrangements with Compute North in the second quarter.
Compute North, the latest victim to the bear market, filed Chapter 11 bankruptcy at a U.S. court last month. The miner claimed that its problems were caused by supply issues, difficulties with its largest lender, last year’s bear markets, rising electricity prices in the U.S. and the time it takes to build its new data center. It’s now becoming profitable.
Marathon is Compute North’s largest client. Compute North places its heavy-duty computers known as miners in Compute North data centres to charge a fee for Bitcoin mining.
Compute North suffered the most from a loan they obtained from Generate Lending LLC in California, a speciality finance company.
Generate provided a loan of $300 million to Compute North in February 2022 to help finance future projects in Nebraska and Texas. The miner was able partially to repay the loan, but about a third remains unpaid.
Generate acquired some Compute North assets as part of its recovery efforts. It also took over two Compute North sites, where it was using its capital for construction. Generate also stopped financing Compute North’s construction of other sites. The miner had hoped that this would produce enough profit to repay the lender.
Compute North owes approximately $500 million to Generate Lending LLC. Other creditors. This bankruptcy filing by the company is the latest sign of the difficulties facing Bitcoin miners. It was triggered by the continuing bear market.