Bitcoin miner files Chapter 11 after unfortunate fire

Mehab Qureshi

Thu, February 12, 2026 at 5:54 AM GMT+9 4 min read

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Whenever a company files for bankruptcy, markets and business models are usually blamed. But not every collapse begins with bad strategy or falling demand. Sometimes, natural disasters deliver a fatal blow.

Pacific Gas & Electric (PG&E) filed for Chapter 11 in January 2019 after facing tens of billions of dollars in liabilities tied to California wildfires, including the deadly Camp Fire.

The company said wildfire-related claims created unsustainable financial pressure, ultimately forcing bankruptcy protection.

J.C. Penney, while primarily burdened by debt and declining sales, cited damage from Hurricane Harvey in 2017 as one of several compounding financial stressors ahead of its 2020 bankruptcy.

Pacific Theatres, operator of ArcLight Cinemas, also pointed to fire-related property damage alongside pandemic shutdowns before filing in 2021.

PG&E remains the clearest example of a bankruptcy substantially triggered by fire-related liabilities. In most cases, natural disasters act as accelerants rather than sole causes.

Related: What is Bitcoin mining? Explained

Mining bankruptcies are usually blamed on margins

In Bitcoin mining, however, bankruptcies are often immediately attributed to falling hashprice and compressed margins.

To be fair, mining is no longer a small-scale operation run by a handful of early adopters.

It now includes industrial hosting firms, complex sale-leaseback financing structures, AI-integrated data centres and even politically connected ventures such as Eric Trump-backed American Bitcoin.

But even in a more institutional era, the economics remain unforgiving.

Related: Analyst predicts 139% surge for sinking Trump-backed stock

NFN8 files for Chapter 11

Texas-based mining operator NFN8 Group Inc. has filed for Chapter 11 bankruptcy protection in the Western District of Texas after a fire at one of its primary facilities and prolonged financial strain tied to lease obligations and litigation.

According to its Declaration in Support of First Day Motions, the company’s distress stems from what Chief Restructuring Officer Erik White described as “a convergence of extraordinary events – market dislocation following the April 2024 Bitcoin halving, prolonged and expensive litigation, and a catastrophic fire at one of the Debtors’ primary operating facilities.”

NFN8 operates what it describes as an “asset-intensive Bitcoin mining business at industrial scale.”

Through subsidiaries NFN8 Capital LLC and NFN8 Holdings LLC, the firm owns more than 5,000 unencumbered machines and manages thousands more via leases and joint ventures across facilities in Texas and Iowa.

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A central pillar of its capital structure was a sale-leaseback equipment financing programme involving more than 250 counterparties.

Related: Bankrupt Bitcoin miner faces new hurdle in Chapter 11 bankruptcy

Under the arrangement, NFN8 sold mining machines to investors and leased them back under fixed-term agreements, with lease payments funded by mining revenue.

The April 2024 halving compressed margins across the sector. According to the filing, revenue-per-terahash recovered “far more slowly than in previous halvings.”

Liquidity pressures intensified as litigation emerged. Three sale-leaseback participants filed suit in October 2024, alleging breach of contract and securities violations.

While the dispute was moved to arbitration, White warned that:

“An adverse arbitral award followed by post-judgment collection efforts would likely result in operational paralysis and a value-destructive dismemberment of the Debtors’ mining platform.”

The fire that tipped the balance

Then came the operational blow.

A fire at NFN8’s 78,377-square-foot Crystal City facility between Christmas and New Year’s Day 2025 “reduc[ed] the Debtors’ mining capacity and revenue by as much as 50%.” While the company maintains insurance coverage, the filing states that “the timing of payment remains uncertain.”

To stabilise operations during the restructuring, NFN8 secured $2.75 million in debtor-in-possession financing from Twelve Bridge Capital LLC. The company now intends to pursue a court-supervised sale process under Section 363 of the Bankruptcy Code.

The filing says Chapter 11 will allow the company to “preserve value and ensure an orderly, transparent restructuring.”

NFN8 is not alone in the current cycle

Orb Energy Co., a Texas-based Bitcoin miner, filed for Chapter 11 in 2025 in the Southern District of Texas.

Rhodium Enterprises, another Texas-based mining firm, filed for Chapter 11 in August 2024 with liabilities of up to $100 million. Proceedings extended into 2025, reflecting continued sector stress.

Related: Explained: Types of Bitcoin mining

Network strength despite miner failures

Yet while individual miners struggle, the broader Bitcoin network tells a different story.

According to CoinWarz data, the current Bitcoin network hashrate stands at 930.57 exahashes per second (EH/s) at block height 936,066, with mining difficulty at 125.86 trillion. Bitcoin is trading around $66,288 at the time of writing.

Hashrate measures the total computing power securing the Bitcoin network — essentially how many guesses per second miners collectively make to solve the next block. The higher the hashrate, the more competitive and capital-intensive mining becomes.

Despite bankruptcies, the network remains historically strong. Bitcoin’s all-time hashrate high reached 1.442 zettahashes per second (ZH/s) in September 2025. For context, one zettahash equals 1,000 exahashes.

Related: Another crypto company halts withdrawals as markets slide

This story was originally published by TheStreet on Feb 11, 2026, where it first appeared in the Bankruptcy News & Analysis section. Add TheStreet as a Preferred Source by clicking here.

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