Compute North Files For Bankruptcy As Cryptomining Data Center Owes Up To $500 Million (coindesk.com) 33
Compute North, one of the largest operators of crypto-mining data centers, filed for bankruptcy and revealed that its CEO stepped down as the rout in cryptocurrency prices weighs on the industry. CoinDesk reports: The company filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas and owed as much as $500 million to at least 200 creditors, according to a filing. Compute North in February announced a capital raise of $385 million, consisting of an $85 million Series C equity round and $300 million in debt financing. But it fell into bankruptcy as miners struggle to survive amid slumping bitcoin (BTC) prices, rising power costs and record difficulty in mining bitcoin. The filing is likely to have negative implications for the industry. Compute North is one of the largest data center providers for miners, and has multiple deals with other larger mining companies.
"The Company has initiated voluntary Chapter 11 proceedings to 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," a spokesperson told CoinDesk in an emailed statement. CEO Dave Perrill stepped down earlier this month but will continue to serve on the board, the spokesperson added. Drake Harvey, who has been chief operating officer for the last year, has taken the role of president at Compute North, the spokesperson said. Compute North has four facilities in the U.S. -- two in Texas and one in both South Dakota and Nebraska, according to its website.
"The Company has initiated voluntary Chapter 11 proceedings to 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," a spokesperson told CoinDesk in an emailed statement. CEO Dave Perrill stepped down earlier this month but will continue to serve on the board, the spokesperson added. Drake Harvey, who has been chief operating officer for the last year, has taken the role of president at Compute North, the spokesperson said. Compute North has four facilities in the U.S. -- two in Texas and one in both South Dakota and Nebraska, according to its website.
They mined a lot of ethereum (Score:5, Interesting)
There's a post floating around of some completely clueless kid who had just bought a couple of very expensive gpus to mine using a software program that just picked whatever the most profitable coin was which of course was always ethereum. He fired his gpus up the day after the merge that ended GPU mining going from around $20 a day to a few pennies a day and post it to some forum in a panic. He had somehow gone this whole time without knowing ethereum was doing away with GPU mining
It was kind of funny to anyone who had had the fight scalpers selling cards to guys like him but it also showed that cryptocurrency is in a bad state. Meanwhile the SEC has just signaled that the switch to proof of stake very likely means ethereum is a security now and will be regulated as such.
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> So it's safe to say we can expect quite a few gpus to hit eBay here. This is also just the first of many miners we're going to go out of business because there's nothing the mine.
Naw... they'll direct all the GPU power at people's password hashes using hashcat ;)
Re:They mined a lot of ethereum (Score:5, Insightful)
Markets will just shift away from ETH. There is a reason it is being regulated as a security, it is a Ponzi scheme now.
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Are the people that designed the cryptocurrency paying out cash to old investors from new investors in their coin?
That's a pretty good summary of how proof-of-stake works, yes.
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"Are the people that designed the cryptocurrency paying out cash to old investors from new investors in their coin?
Who is promising such things? THEY might be running a Ponzi scheme but how is this the fault of a cryptocurrency?"
Yes, that is a fair summary of how proof of stake works. It is a design feature of the cryptocurrency, that is why it is the fault of the cryptocurrency.
Re:They mined a lot of ethereum (Score:4)
It's also harder to get influencers and streamers to push your shit coins because of few people have already been thrown in jail for doing that.
The result is that forget breaking even or even only losing enough money to keep investors happy mining and cryptocurrency with gpus is a massive money loser.
Hilariously crypto has centralized around the ethereum, Bitcoin handful of tokens like us tether used to get real dollars in and out of the system when your laundering money. There's no room anymore for the Ponzi scams what would the SEC watching them
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"They've been trying. The problem is ethereum is the only gpu-mined coin that sells for anything."
I suspect one of the privacy coins will rise up. There is room for both BTC with a public ledger and a privacy ledger coin to co-exist.
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Markets will just shift away from ETH. There is a reason it is being regulated as a security, it is a Ponzi scheme now.
Now?
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Cryptocurrency is not innately a Ponzi scheme, this is oft repeated, trivially debunked, then repeated again. I oppose ETH because it vastly increases the attack surface over something like Bitcoin and does for cryptocurrency what ActiveX did for the browser (exploits, exploits, exploits!). So I'm not going to defend the model in an ETH specific way. Legitimate cryptocurrency isn't actually a commodity, it is a currency so it isn't an investment. That is what the SEC has recognized.
That said, legitimate cry
Silly things get bought... (Score:2)
This is what happens with fake money (Score:1)
Imagine going into a store to buy something. It costs 20 dollars so you hand the person 20 dollars and they say "Sorry, that's only worth 19 dollars today".
If your "money" can substantially change in value from one day to the next, it is not really money and is useless.
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No. That's actually what happens with "real" money. You go into a store to buy a gallon of milk. You give them $5, expecting change. Then, they say you need to give them two more dollars.
Your "real" money is changing in value on a daily basis this year.
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And yet, the USD is the basis everything is compared to, not gallons of milk.
That's because the USD is the current World's Reserve Currency. The buy/sell is actually a trade and the ratio is re-balanced everywhere every day for almost everything. It's seamless. That's how a real market works and right now the world is trying to emulate a real market with things of emulated value determined by mathematical equations rather than some slob looking at that blender and trying to decide how much of his labor he's willing to trade for it. Whole countries trying to do it like this. Across t
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No. That's actually what happens with "real" money. You go into a store to buy a gallon of milk. You give them $5, expecting change. Then, they say you need to give them two more dollars.
Your "real" money is changing in value on a daily basis this year.
Where do you live that the price of something changes in the time you take it off the shelf and go to pay for it? Last time I bought milk the price on the shelf (almost $5/gallon) was the exact price I paid for it.
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And what about that do you think would change of the milk were priced in BTC? The only place you see this with BTC is places that are pricing in USD and allow you to purchase with BTC instead, these will often get a real time quote but the price is usually good for some period of time AFTER it is calculated. Also the same thing happens with products priced in USD that lets you pay from foreign currency denominated accounts, they'll calculate a real time exchange that will be different minutes later.
Bitcoin
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Ah yes. The famed dead cat bounce.
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No. That's actually what happens with "real" money. You go into a store to buy a gallon of milk. You give them $5, expecting change. Then, they say you need to give them two more dollars.
Your "real" money is changing in value on a daily basis this year.
How often does the price of a gallon of milk change that much from one day to the next? With Bitcoin, it's pretty much a weekly occurrence, and has been for a few years.
Re: This is what happens with fake money (Score:2)
Games (Score:3)
Play stupid games—win stupid prizes.
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Simple solution (Score:1)
Gee, all that energy used, and bankrupt! (Score:2)
.
Any idea how they got in so deep? (Score:3)
I'm obviously not expecting them to be doing well, having your customer base all go belly up more or less simultaneously will ruin your day; but there's a lot of difference between "potentially going to go out of business, write off some debts, and get reopened doing similar things" and "somehow owes people 500 million dollars".
Were the 4 facilities they had, either because of location(eg. especially strong emphasis on power costs to the detriment of a good position relative to fiber) or because 'miner' datacenters get built to sufficiently different standards, not amenable to being switched over to just do normal datacenter stuff, for which their remains a fairly active market? Were their finances a lot less separate from those of their customers than one would normally expect from a colo and a lot of these losses are actually exposure directly to assorted 'crypto' nonsense operations rather than just not having those guys as customers anymore? Did they manage to pull off some sort of 'the WeWork of datacenters' and run a stupidly overvalued and unprofitable operation on pure hype despite being in a market mostly populated by boring, sensible, relatively low profile and risk averse outfits?
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so I'm a bit puzzled as to how they managed to end up half a billion dollars in the hole.
Build lots of infrastructure while losing lots of customers. It's not hard. Datacentres are service providers. If they can't provide a service at a suitable price they go under. If they haven't paid off the cost of their assets they end in a hole. If they have unfilled contractual obligations they end in a hole.
These guys weren't running some GPUs in the corner of a bedroom for heating, they had a pretty large facility full of hardware.
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We have a few companies like this that have set up shop [inquirer.com] in our area, rural communities in the southeastern US that have cheap hydroelectric power and few regulations. They bought a bunch of fields outside of small towns, hauled in shipping containers full of hardware with big noisy fans welded to the side
Re: Any idea how they got in so deep? (Score:2)
Oh No! (Score:3)
Anyway...
A sigh of relief (Score:2)