Mining winter and fire double blow, Bitcoin mining company NFN8 files for bankruptcy in the US

U.S. Bitcoin mining company NFN8 Group and its subsidiaries (NFN8 Capital and NFN8 Holdings) officially filed for Chapter 11 bankruptcy protection with the Western District of Texas Bankruptcy Court on February 2, 2026. According to the documents, NFN8 is planning to sell most of its assets under court supervision to address its increasingly severe financial shortfall.

Halving Effect and Texas Mine Fire Deal a Double Blow to Operations Cash Flow

NFN8’s financial crisis was primarily caused by the Bitcoin halving in April 2024, which reduced block rewards and significantly compressed mining profits; secondly, a major fire at its core mining facility in Crystal City, Texas, at the end of 2025, directly halted 50% of the company’s mining capacity. Additionally, the company faces ongoing litigation costs related to sale-leaseback agreements for equipment and disruptions in custodial services due to Core Scientific’s bankruptcy, all of which have drained operational cash flow, ultimately forcing the company into bankruptcy restructuring.

Chapter 11 Bankruptcy: A Haven for Corporate Reorganization and Debt Negotiation

The company’s filing for Chapter 11 bankruptcy is a legal mechanism in the U.S. Bankruptcy Code that allows businesses to reorganize. Unlike Chapter 7 liquidation, Chapter 11 permits companies to continue operating under court supervision and temporarily suspends creditor collection actions (Automatic Stay). This “breathing period” enables the company to negotiate with creditors, develop a restructuring plan, or sell assets in an orderly manner to maximize asset value. For NFN8, filing Chapter 11 means the company will not immediately shut down but will attempt to preserve remaining value through legal procedures, avoiding assets being sold at low prices.

$2.75 Million DIP Financing to Sustain Operations During Asset Sale

To maintain basic operations during the asset sale process, NFN8 has secured up to $2.75 million in debtor-in-possession (DIP) financing from Twelve Bridge Capital. DIP financing is unique to Chapter 11 proceedings, allowing bankrupt companies to obtain new funding during restructuring, with higher repayment priority than existing debt. The court has approved NFN8’s temporary withdrawal of $1 million (approximately $675,000 net after fees), used to pay salaries, electricity bills, and professional service fees.

Sale-Leaseback Model Fails, Over 250 Counterparties Affected

NFN8’s business model heavily relies on a sale-leaseback arrangement. Under this model, clients purchase mining machines and entrust NFN8 to operate them, paying fixed monthly fees during the contract period. However, with Bitcoin hash price (Hashprice) hitting record lows, NFN8 cannot generate enough cash flow from mining revenues to cover these lease payments, leading to multiple payment suspensions and investor lawsuits. The documents reveal that this plan involves over 250 counterparties, and contract disputes have become the final straw that toppled the company.

Which Assets Are Expected to Be Sold?

Despite its financial difficulties, NFN8 Chief Restructuring Officer Erik White stated that the company still holds over 5,000 “unencumbered” Bitcoin miners, which will be the core assets in the bankruptcy auction. NFN8 currently operates multiple mining farms in Crystal City, Texas, as well as in Shelby and Walnut, Iowa. The debtors plan to sell the entire mining equipment fleet, related infrastructure, and operational sites and lease agreements, making it quite attractive to buyers interested in acquiring low-cost hashing power assets.

This article, “Mining Winter and Fire Double Blow, Bitcoin Miner NFN8 Files for Bankruptcy in the U.S.,” was first published on Chain News ABMedia.