The Bitcoin mining company Cointerra Inc which was known for its competence some time ago has gone bankrupt. The company has filed to liquidate its assets under Chapter 7 of the US Bankruptcy Code. This is going to be the next shocking event after the collapse of Bitcoin exchange Mt. Gox the last year.
The reports say that the company listed assets and debt of as much as $50 million each in a Chapter 7 filing Saturday in US Bankruptcy Court in Austin, Texas. However, it failed to give any reasons behind the filing. It has been facing trouble for the couple of months after a quite successful run in 2013 wherein it had raised $1.5 million in investment.
The company wanted to use the raised fund to start producing TerraMiner IV, a two terahash per second ASIC Bitcoin miner that was originally priced at $13,999 and was set to ship in December 2013. However, things did not materialize as they were wanted. A lot of complaints from the customers who had booked the mining machine shot up.
The real trouble for Cointerra has been its incapability to deliver the ASIC to the customers who had paid for them. Though the company seemed promising with top notch technical people with relevant experience on board, things were not going well as they were planned. Over the months the value of Bitcoin in dollars fell almost 70 percent.
Second Bitcoin Mining Machine Maker to go Bankrupt in a Couple of Months
The downward movement is continuing even this year. Moreover, as the mining process gets increasingly complicated as more Bitcoin are created, the demand for computing power also shoots up. Bitcoin mining is also becoming expensive for a lot of companies. Individual miners are shunning Bitcoin mining; the demand for Data Centers is shooting up.
Though Cointerra has been backed up by venture capitalists, when it started facing legal trouble from its customers, it was too much even for them to stand with the company. In June 2014, it was sued by a California man for failing to deliver his miner on time. The court had then lambasted the company for undermining the consumer’s right.
Finally, it had to file for bankruptcy. With this it has become the second major miner manufacturer which has gone bankrupt in the last couple of months. According to court filings, it has $10 million to $50 million in combined estimated assets and liabilities and around 400 creditors spread out worldwide from Canada to Russia to Hong Kong.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org