Cointerra Files for Bankruptcy With Up to 999 Creditors Owed

Mining computer designer and cloud mining operation Cointerra files for bankruptcy, leaving debts up to 50 million USD and potentially 999 creditors unpaid. The Bitcoin mining sector is now in dire straits due to the raising operating costs of mining combined with the recent price drop.

Cointerra, the manufacturer of the TerraMiner series of mining computers, has filed for Chapter 7 bankruptcy in the United States. The filing comes two weeks after the start-up was sued for US$1.5 million by C7 Data Centers Inc. over unpaid invoices. The bankruptcy process will see the company's assets liquidated to pay its creditors.

The mining computer designer and provider of cloud mining services becomes the second mining company to declare bankruptcy in four weeks after Dutch firm Mining ASICs declared itself bankrupt on December 31, 2014. Another US based mining computer producer, HashFast, also filed for Chapter 11 bankruptcy in June, 2014. Add this to the recent announcement from CEX.IO that it will suspend its cloud mining operation due to the “Bitcoin price drop, as well as the up-scaling of the mining difficulty,” the Bitcoin mining sector is in a tough spot.

Filing for bankruptcy in an Austin courthouse, Cointerra declared it had between US$10 and US$50 million in assets and liabilities and listed between 200 and 999 creditors as owed. Creditors to the firm will have to file with the court their “proof of claim” in order to receive funds from any liquidation sale that occurs.

Speaking to CoinDesk in mid January Cointerra CEO, Ravi Iyengar, pointed to problems similar to those experienced at CEX.IO as a reason for their defaulting on payments of the US$4.25 million C7 Data Center contract.

“Who would predict the downfall that bitcoin has taken, in terms of price and difficulty and all that? […] Things were going well. We had many different meetings, in terms of investment opportunities and all that, so there was no indication at that time whatsoever that things [would worsen]."

CEX.IO's own CIO Jeffry Smith talked to Cointelegraph on the January 14 and discussed where the Bitcoin price needs to be in order to make mining profitable again. Smith responded that as “mining strongly depends on luck … US$320 per BTC” would be the point at which most miners, and not just those lucky few, would get out of the red.

Cointerra first made headlines back in 2013 when the start-up announced a two terahash per second mining rig. With the chip designed by Iyengar, former Lead Architect at Samsung's Austin Research Center, the company quickly raised US$1.5 million in initial funding capital. Doubts quickly emerged about the company, however, as shipment dates were missed, and the company was forced to offer discounts and upgraded hardware to their customers. 

Did you enjoy this article? You may also be interested in reading these ones:

Venezuelan Politician Buys Out Bankrupt HashFast German 'Bitcoin Brothers' Unveils Bitcoin Mining Supercomputers Mining Titans Unveils Customizable Industrial Mining Mobile Data Center, the Helios CryptoKube