Bitcoin Miner Marathon Digital Unfazed by $81.3M Exposure to Bankrupt Data Center

7 October 2022

in Mining

Reading Time: 3 mins read

In its latest monthly report, Bitcoin miner Marathon Digital revealed exposure of $81.3 million in the now-bankrupt data center Compute North.

The publicly listed mining firm had invested $10 million in convertible preferred stock and $21.3 million in unsecured senior promissory notes in bankrupt data center Compute North.

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Marathon added that it had paid approximately $50 million to Compute North as operating deposits for hosting services, primarily at its Wolf Hollow and King Mountain facilities in Texas.

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The latter firm submitted a Chapter 11 bankruptcy filing on September 22, citing growing pressure due to the effects of crypto winter and rising energy costs.

Despite the data center’s financial woes, Marathon Digital stated that it “has not experienced any significant negative impacts on its operations at King Mountain.” Marathon’s “asset light” approach means that the firm doesn’t construct or own mining facilities, relying on third parties like Compute North for its operations.

The company revealed it experienced “some delays” at Wolf Hollow though, which Compute North said were “attributed to a regulatory matter.”

“While we expect operations to continue as originally anticipated, our asset light model provides us with the optionality to relocate our miners to other locations, should the need arise,” Marathon said in a statement.

Compute North, one of the world’s largest crypto-mining infrastructure providers with facilities in Texas, Nebraska, and South Dakota, raised $385 million in strategic funding in February this year. The firm’s other big-name customers include Compass Mining, Hive Blockchain, and Atlas Mining.

Neither Marathon Digital nor Compute North has responded to Decrypt‘s request for comment at press time.

Marathon holds $207 Million in Bitcoin

Marathon’s monthly report revealed the firm currently holds 10,670 Bitcoin with a “fair market value” of $207.3 million. The firm said it produced 360 BTC in September and 616 BTC during the third quarter of this year.

On the year-to-date basis, Marathon reported a 23% increase in its Bitcoin production, with 2,582 BTC mined as of September 30.

According to Marathon’s CEO Fred Thiel, the firm currently has approximately 57,000 active Bitcoin miners deployed, producing about 5.7 EH/s.

“We expect to continue building our hash rate in the fourth quarter as approximately 19,000 additional miners, representing approximately 2.0 exahashes per second, are expected to come online in the next 30 days,” said Thiel.

Marathon’s shares, which are traded at the Nasdaq exchange, are up about 2% at pre-market trading on Friday, changing hands at $13.10 by press time. The firm’s stock has grown 21.69% over the past five days, and more than 12% in the last month.