Bitcoin Miner Marathon Invested $31.3M in Bankrupt Data Center Compute North

Marathon Digital (MARA), which is one of the world's largest bitcoin (BTC) miners, said it had invested $10 million in convertible preferred stock and $21.3 million in an unsecured senior promissory note in different entities within bankrupt data center Compute North.

Marathon, which doesn’t own its mining facilities and uses third-party data centers to park its computers, also has paid about $50 million in operating deposits to Compute North, according to a statement on Thursday. Those deposits were mainly related to security deposits and prepayments associated with the operation of King Mountain and Wolf Hollow mining facilities in Texas, the company said.

Compute North filed for bankruptcy last month, citing the severe bear market, supply issues and trouble with its largest lender. Marathon is one of Compute North's largest customers, placing its heavy-duty computers known as miners in Compute North's data centers for a fee to mine bitcoin.

Read more: Troubled Data Center Compute North Struggled With Crypto Winter. Then Its Relationship With a Major Lender Soured

Marathon said that the bulk of its mining operations are hosted by a Compute North and NextEra joint venture at the King Mountain facility. It also has operations hosted by Compute North in the Wolf Hollow site, as well as miner operations in Compute North’s facilities in Nebraska and South Dakota.

The miner said, however, that its King Mountain and Wolf Hollow sites aren't directly subject to Compute North’s bankruptcy process. Marathon said it didn’t face any significant impact at its King Mountain site, although there were some delays at Wolf Hollow, unrelated to the bankruptcy process, according to the statement.

Marathon has 5.7 exahash per second (EH/s) of computing power and expects to reach 23 EH/s mid-2023. In comparison, rival miner Riot Blockchain (RIOT) has 5.6 EH/s of mining power and expects to reach 12.5 EH/s by the first quarter of next year.

Shares of Marathon have fallen 61% this year, while bitcoin has lost more than 50% of its value.