The once-mighty Compute North, one of the largest crypto mining services firms in North America, has been effectively reduced to a shadow of its former self after a federal judge approved its final reorganization plan. The firm had filed for bankruptcy protection in September due to its inability to meet its debt obligations.
Compute North has since closed 13 asset sales, four of them major, which have “satisfied” all of its secured debt of $250 million. This was made possible through settlements with numerous companies, including industry giant Marathon Digital Holdings, which agreed to a general unsecured claim of $40 million in return for accepting the plan. Other 11 firms had to settle with Compute North for relatively minor claims for the plan to go through.
Three of the agreements – two from customers and one from a supplier – came at the last minute. Decimal Digital, which had ordered machines and hosting services from Compute North, will get its machines back but pay the packing and transport fees. Decimal will also serve in the committee that will oversee the enforcement of the plan, along with investment firm Touzi Capital. Corpus Christi Energy Park, which was building the infrastructure for a mining site in Texas, also agreed at the last minute to retain an up to $5 million unsecured claim. BitNile, a relative newcomer to the industry, has claimed $20 million, $18 million of that in damages. The miner has also sued Compute North for fraud, arguing that the hosting firm never tried to plug in its machines as per their deal signed in August, just before the bankruptcy. BitNile was allowed a $1 million unsecured claim for voting purposes.
The plan approves the final list and classification of creditors’ claims, and sets up a litigation trust to go forward looking for funds from ongoing cases. This will in turn determine how Compute North’s remaining assets will be divided among the remaining claimants. Generate Capital, one of its major lenders, earlier took over two of the bankrupt company’s mining sites in Texas, which U.S. Bitcoin Corp. will manage. Foundry, which was owed $10 million from an equipment loan, bought two other minor sites. Foundry is owned by CoinDesk’s parent, Digital Currency Group.
The reorganization plan for Compute North is a reminder of the risks associated with the crypto mining industry. Despite the company’s efforts to settle its debts and move forward, it is now a shadow of what it once was. The remaining unsecured creditors will retain ownership of remaining assets, such as transformers and containers, and disburse them among the claimants. A litigation trust will be set up to close from ongoing legal procedures.