Poolin, the Singapore-based Bitcoin mining pool that once topped the global rankings, filed for Chapter 11 bankruptcy protection on July 22 in New Jersey. The filing reveals liabilities estimated between $100 million and $500 million, while assets are valued at under $10 million, highlighting a significant financial shortfall.
Details of the Bankruptcy and Asset Sale
The company, along with its US affiliates Lonestar Dream and Lonestar Taproot, ceased mining operations at its Pyote and Tarbush locations in West Texas on July 10. Poolin aims to complete a court-supervised sale of these Texas mining sites rather than pursue a traditional restructuring. A stalking-horse bid of $52 million has been placed by Thor CALAP LLC, setting the minimum price for the auction.
Michael DuFrayne, Poolin's Chief Restructuring Officer, disclosed prebankruptcy obligations totaling about $173.1 million, with roughly $163.7 million owed to Poolin Wallet customers as IOUs. The company halted withdrawals back in September 2022, affecting approximately 11,700 users holding balances over $100.
Mining Industry Shifts and Market Impact
Founded in China in 2017, Poolin reached its peak as the top mining pool by September 2019. However, China's 2021 ban on crypto mining and the market downturn in 2022 undermined Poolin's heavily leveraged business model. Its ongoing asset sale has attracted interest not only from crypto miners but also from AI and high-performance computing (HPC) companies, with over 335 potential buyers contacted, resulting in 28 nondisclosure agreements and seven letters of intent.
This move reflects a broader trend in the mining sector, where several public miners have sold over 15,000 BTC in 2023 to pivot towards AI and HPC infrastructure. Firms like Bitdeer, which liquidated its entire Bitcoin holdings, and Riot, funding its Texas data center expansion through selling mined coins, illustrate this shift. These transitions have been well-received by investors, as miner stocks have outperformed Bitcoin as spending on AI infrastructure accelerates.
Mining difficulty dropped 8.48% from 138.96 trillion in June to 127.17 trillion in mid-July, easing operations for remaining miners. The network hashrate also declined by about 13%, from 1.03 zetahashes per second to 883 exahashes per second. Meanwhile, the hashprice the daily revenue per petahash fell to around $31.10, down 37% from its peak in October 2022 despite a recent uptick.
Bitcoin's price hovered near $65,069, slipping 0.8% over 24 hours and dropping about 45% year over year. Despite market volatility, miner-held Bitcoin remains steady at approximately 1.785 million BTC, indicating miners continue to sell newly mined coins steadily rather than exiting positions outright.
The upcoming auction for Poolin's power assets will test whether their value is higher for AI and HPC operators compared to traditional mining companies.
This article provides information only and does not constitute financial advice.
