Mining hardware maker Cointerra announced today that it cannot meet its current obligations and has filed for Chapter 7 bankruptcy.
The notice, posted on the company’s homepage, follows a recent lawsuit by C7 Data Centers. C7, one of the many creditors listed in the bankruptcy petition filed on January 24, claims it is owed $5.4 million for unpaid hosting and electricity services. Overall, creditors are listed as being owed between $10 million and $50 million. The company reports holding roughly equivalent assets and has stated it will be unable to repay unsecured investors.
What Went Wrong for Cointerra?
Cointerra, based in Texas, launched in 2013 with significant attention from the Bitcoin community, in part because Avi Iyengar, a former CPU lead architect at Samsung’s Austin research center, was involved. The company’s first product, the Terraminer, shipped late and suffered from performance and reliability issues. It failed to reach the promised 2 TH/s hash rate, which led to customer dissatisfaction and a class-action lawsuit.
In September the company introduced a new product, the Aire Miner, promoted as the first miner built on 16 nm technology. Adoption was slow, however. Competitors offered lower-priced equipment using older 28 nm processes, and many miners had lost confidence in Cointerra’s ability to deliver reliably. Their 16 nm chips were scheduled to tape out in September, but it remains unclear whether that milestone was met. Given the company’s ongoing financial troubles, it seems unlikely they had the $8–$10 million estimated to complete development and production.
A creditors’ meeting for Cointerra is scheduled for February 27, 2015. If you are a creditor or affected customer, consider documenting your claims and monitoring the bankruptcy proceedings for updates.