Out of Compute North’s Bankruptcy Rises a 300MW Bitcoin Miner With a Novel Energy Offering
![Out of Compute North’s Bankruptcy Rises a 300MW Bitcoin Miner With a Novel Energy Offering](https://www.btcethereum.com/blog/wp-content/uploads/2023/04/163731-out-of-compute-norths-bankruptcy-rises-a-300mw-bitcoin-miner-with-a-novel-energy-offering.jpg)
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
A group of energy and bitcoin mining veterans are developing a 300-megawatt (MW) hosting site in Corpus Christi, Texas, that will give customers an unusual option on how they manage their electricity costs.
The site will be connected to the grid and will be co-located with an additional 300 MW battery storage facility. Customers will be able to form their own power management strategy and decide if and how they participate in demand response programs.
The firm building the site in Texas is called Saxet Infrastructure Group. The all-in hosting fee won’t be fixed. Rather, Saxet will pass variable energy costs onto its customers and charge a fixed management fee that will be lower than that of many of its competitors, the firm said.
Electricity is usually miners’ biggest operating expense. Many hosting contracts that were signed during the 2021 bull market had a fixed price, which included an energy and management fee. Those fees became unsustainable for hosting firms during the energy crisis of 2022.
“In a fixed-price hosting market, as we’ve seen the market shake out, one party usually ends up losing,” either the customer is signing up for a fixed price that turns out to be too high or the price is too low, and so the infrastructure partner hosting partner is at risk, said Ro Shirole, who left retail-facing hosting firm Compass Mining to join Saxet as its chief commercial officer.
Crypto winter casualty
The site in Corpus Christi that Saxet is building also took a hit from this common hosting conflict.
Compute North, which had been one of the largest players in the hosting business, filed for Chapter 11 bankruptcy in September 2022. A declining bitcoin (BTC) price and the company’s relationship with its biggest lender, Generate Capital, which ended up taking over Compute North’s stake in another two of its sites, were partly to blame.
But another problem was that Compute North’s services agreements didn’t allow it to pass through energy costs. The company could only turn off its customers’ machines when energy prices exceeded a certain level. “While this mechanism helps to manage expenses during a period of high power costs, it is not an effective strategy for addressing long-term energy price increases,” Compute North Chief Financial Officer Harold Coulby said in a filing with the U.S. Bankruptcy Court in southern Texas.
Two of Saxet Infrastructure’s executives, CEO Steve Quisenberry and Chief Operating Officer Matt Held, were also partners at Bootstrap Energy, a company that Compute North had hired to develop the Corpus Christi site in March 2022. Bootstrap Energy also owns the land that the site is on. Shirole left Compute North in December 2021 and has filed an employment discrimination lawsuit against the firm.
Compute North stopped paying the development firm in the summer of 2022, and as of the bankruptcy date, it hadn’t made $14.9 million in payments. The bankruptcy court rejected the development contract, and so Bootstrap Energy was back on the saddle to develop the site.
Location, location, location
The site’s location provides several advantages, Held said. The relatively moderate temperature in the south of Texas, near the sea, is much cooler than other parts of Texas, including West Texas where a lot of miners have flocked. It is also situated at lower altitude, making for denser air. The lower temperatures and more humid environment helps reduce the costs of cooling machines.
The area is also home to almost 7 gigawatts of wind power generation, with winds not dying down in the afternoon, as it does in West Texas, Held said. Demand for electricity in the area is fairly stable because it is home to industrial facilities that require stable amounts of power throughout the day and few population centers, he said.
Looking ahead
The site is still under construction and the Saxet team is now signing contracts with tenants. Saxet has secured all the capital needed for the construction of the site from a New York multibillion-dollar private-equity firm and a private investment group. The funding will be released once Saxet has reached a minimum scale of customers, Quisenberry said.
The new firm expects the full 300 MW of hosting capacity to be up and running by the end of the year.
Saxet is taking contracts only for larger than 25 MW from institutional clients in order to be able to execute its tailor-made power management strategies, Shirole said.
“Quite a few of the large-scale miners that we’ve walked through the structure on this, truly view this as the future for at-scale mining,” Shirole said.
The strategy, however, can also change over time as both the market and regulations change, and customers will be reviewing their power strategies on a regular basis, the Saxet executives noted.
“The full transparency of energy pricing with our clients is the key to what we’re doing,” and for the industry in general, Quisenberry said.
DISCLOSURE
Please note that our
and
do not sell my personal information
has been updated
.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a
strict set of editorial policies.
CoinDesk is an independent operating subsidiary of
which invests in
and blockchain
As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of
which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG
.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
https://www.coindesk.com/business/2023/04/26/out-of-compute-norths-bankruptcy-rises-a-300mw-bitcoin-miner-with-a-novel-energy-offering/?utm_medium=referral&utm_source=rss&utm_campaign=headlines
The post Out of Compute North’s Bankruptcy Rises a 300MW Bitcoin Miner With a Novel Energy Offering appeared first on BTC Ethereum Crypto Currency Blog.
Text source: BTC Ethereum Crypto Currency Blog