A Canadian Bitcoin mining company has filed for bankruptcy in the latest sign that the dropping price is causing miners to capitulate. Great North Data, a Labrador-based miner who secured massive loans from several Canadian government entities, filed in late November, owning taxpayers hundreds of thousands of dollars. The news adds more weight to the theory that stagnant Bitcoin price action is having a detrimental effect on miners’ activities, although other factors seem to have been at play for Great North Data.
Not Such a Happy Valley for Great North Data
Great North Data hosted bitcoin mining operations and artificial intelligence algorithms at facilities on two sites in Labrador, east Canada – Labrador City and Happy Valley-Goose Bay. According to the bankruptcy documents, the company listed $13.2 million in liabilities against just $4.6 million in assets, which will need to be split between federal and provincial governments. Other unsecured creditors are The Atlantic Canada Opportunities Agency (ACOA) for $281,675, and The Newfoundland and Labrador government’s Business Investment Corporation for $313,718, with the latter secured by Great North Data’s buildings, land, machinery, and equipment.
More Evidence of Capitulation?
Great North Data received funding as far back as 2015, with a second tranche coming in 2016, but a lawsuit filed by a Hong Kong-based bitcoin mining firm in 2017 (which is still unresolved) seems to have put financial pressure on them, and almost two years of largely negative Bitcoin price action looks to have finally forced the company’s hand and caused them to admit defeat.
We reported last month that miner capitulation posed a real danger to the Bitcoin price, with miners being forced to sell the BTC they earn as a reward for mining the blocks in order to fund their activities. This selling pushes the price down further, causing more BTC needing to be sold to keep up, resulting in a vicious cycle that runs until miners have to sell out completely, as Great North Data has done. They aren’t the first, and they certainly won’t be the last.
