Compute North, based in Eden Prairie, files for bankruptcy protection

Compute North, based in Eden Prairie, files for bankruptcy protection

The cryptocurrency crash and rising energy prices have claimed the life of one of the biggest service providers in the crypto industry.

Compute North, an Eden Prairie-based company that builds scalable data centers for blockchain, cryptocurrency mining and distributed computing businesses, filed for Chapter 11 bankruptcy protection in the Southern District of Texas.

“The company has initiated voluntary Chapter 11 proceedings to provide it with an opportunity to stabilize its business and implement a comprehensive restructuring process that will allow us to continue to serve our customers and partners and make the necessary investments to achieve our strategic goals,” Kristyan said. Mjolsnes, head of marketing and sustainability at Compute North, said in an email.

Compute North co-founder and CEO Dave Perrill stepped down from operations earlier this month, but remains a member of the board. Drake Harvey, who was the chief operating officer, is now named president.

The company made its initial filing Thursday for itself and 18 related LLCs. Chapter 11 protection allows businesses to reorganize their finances with the help of a court while maintaining day-to-day operations.

According to the filing, the company has more than 200 creditors and between $100 million and $500 million in assets and a similar amount in liabilities.

Compute North had raised $385 million in debt and equity this year. About $300 million of this capital was in the form of debt financing; the rest was equity financing from private investors familiar with independent and sustainable energy projects.

Compute North had built data centers in Nebraska, Texas, and South Dakota, and the newly raised capital was to fund the expansion of existing facilities and the construction of additional data centers. The company had recently opened a fifth data center in McCamey, Texas, next to a wind farm and in August began construction of another center in Granbury, Texas.

Cryptocurrency mining companies and hosting companies need a lot of computing power to unlock new currencies and record transactions in a widely distributed blockchain.

Compute North’s promise was to be a sustainable host company by building its data centers in modular, scalable segments and using shortenable energy that could use variable sources of renewable energy, such as solar parks and wind turbines. Electricity could also be reduced – reducing their power needs if the power grid demands more power during peak periods or in the event of system outages caused by storms or other events.

Bitcoin, one of the most popular cryptocurrencies, is down around 60% in 2022, mirroring similar declines for other cryptocurrencies. And despite the use of renewable energy, rising energy prices had also stressed Compute North.

In a statement filed in Texas bankruptcy court, Compute North chief financial officer Harold Coulby said these developments, along with supply chain issues and this year’s apparent falling out with one of its Debt investors – San Francisco-based Generate Capital – contributed to the Chapter 11 filing.

According to Coulby’s statement, Generate agreed to loan the company $300 million in February. In July, Generate said Compute North defaulted on certain technical events of the loan and took control of parts of the company, relying on Compute North’s liquidity crunch.

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