Poolin, the former global Bitcoin mining powerhouse, filed for Chapter 11 bankruptcy on July 22, leaving behind $173 million in liabilities and 11,700 creditor users holding $164 million in unsecured debt instruments.
🔑 Key Takeaways
- Poolin filed Chapter 11 on July 22 with estimated liabilities of $173.1 million
- 11,700 wallet users hold balances exceeding $100, totaling $163.7 million in unsecured claims
- Acquisition agreements totaling $52 million have been signed for Texas mining assets
- Lonestar Dream ceased mining and hosting operations in Texas on July 10
- Founded in 2017, Poolin briefly became the world’s largest mining pool in 2019
Bankruptcy Filing and Judicial Structure
Poolin Technology Pte. Ltd., along with its two U.S. subsidiaries Lonestar Taproot LLC and Lonestar Dream Inc., filed voluntary petitions before the U.S. Bankruptcy Court for the District of New Jersey on July 22. The three cases are being jointly administered under docket number 26-18325. The first-day hearing was initially scheduled for July 27 at 11:00 AM Eastern Time.
Chief Restructuring Officer Michael DuFrayne estimated pre-petition obligations at approximately $173.1 million. Poolin’s preliminary capital structure shows $173,109,791 in pre-petition obligations, against only approximately $1.2 million in a New Jersey bank account, an office lease, and an intercompany claim for Poolin Technology.
| Entity | Estimated Assets | Estimated Liabilities |
|---|---|---|
| Poolin Technology | $1M – $10M | $100M – $500M |
| Lonestar Dream | $1M – $10M | $100M – $500M |
| Lonestar Taproot | $50M – $100M | $100M – $500M |
Each entity has between 10,001 and 25,000 creditors. Approximately 11,700 wallet users held balances exceeding $100 at the time of the withdrawal freeze in 2022.
Origin of the Debt and 2022 Liquidity Crisis
The debt originated from the 2022 liquidity crisis. When Bitcoin fell below $20,000 in June 2022, the digital collateral pledged as security lost value and triggered margin calls. Poolin had initially borrowed approximately $213 million from Antalpha against digital assets collateralized at approximately $355.8 million at the time, according to court documents reviewed by TheEnergyMag.
« The proceeds from this financing were used for customer withdrawals, interest payments, mining equipment, its U.S. expansion, and current operating expenses. »
Court Documents, Poolin Technology
Poolin used these funds to cover customer withdrawals, pay interest, purchase mining equipment, and finance its U.S. expansion. By September 2022, the company could no longer meet withdrawal demands and suspended payments, issuing approximately $163.7 million in unsecured debt instruments to users.
Management stated that Antalpha liquidated approximately $265 million in digital asset collateral in November 2022 for approximately $260 million owed. Poolin subsequently ceased ordinary business operations.
Business Model and Unprofitable Texas Expansion
Poolin’s wallet business model relied on deposit products promising annual yields between 2% and 8.8%, according to the filed statement. These products operated by borrowing stablecoins against customers’ crypto assets.
Failure of Texas Expansion
The Texas expansion proved unprofitable. This expansion was designed to access up to 600 megawatts of electric power, but only 100 MW were initially available, leaving the company with more mining equipment than it could deploy. Lonestar Dream shut down mining and hosting operations in Texas on July 10 and does not intend to resume mining.
« The Texas affiliates recorded approximately $8.8 million in losses from equipment sales during fiscal years 2023 to 2025, and approximately $45.9 million in cumulative losses across all Lonestar operations since their inception. »
Restructuring Officer Report
Acquisition Offers and Sale Process
To attempt creditor repayment, Poolin entered a purchase agreement with Thor CALAP LLC acting as the stalking horse bidder. The latter signed a $15 million agreement for the Pyote assets and a separate $37 million agreement for the Tarbush-related assets, establishing a total opening consideration of $52 million for virtually all covered Texas mining assets.
| Agreement | Amount | Break-up Fee |
|---|---|---|
| Pyote Assets | $15M | 3% ($450,000) |
| Tarbush Assets | $37M | 3% ($1.11M) |
| Total | $52M |
These offers represent approximately 31.8% of the debt instruments in gross arithmetic, before estate fees, liens, bankruptcy costs, and final claims reconciliation. The proposals also include reimbursement fees capped at $250,000 for Tarbush and $150,000 for Pyote.
The company conducted a three-month marketing campaign, contacting over 335 strategic, financial, and hybrid prospects, including crypto miners and operators of artificial intelligence or high-performance computing data centers. This effort resulted in 28 nondisclosure agreements, seven letters of intent, and three additional expressions of interest for the auction.
Poolin’s History and Current Position
Poolin was founded in 2017 and briefly became the world’s largest Bitcoin mining pool in 2019, mining approximately one in seven Bitcoin blocks globally at its peak. Its hash rate exceeded 25 EH/s in 2021 and 2022, while its network share peaked at nearly 18% around 2020. Addresses associated with the pool mined 28,371 blocks and earned 256,805 BTC in total rewards.
« The mining ban in China in 2021 forced Poolin to relocate to Texas, but this relocation failed to restore the company’s financial situation. »
Mining Industry Analysts
Today, Poolin controls only approximately 0.2% of global hash rate and ranks seventeenth among mining pools. This dramatic decline reflects the company’s financial collapse since suspending withdrawals in 2022.
Outlook and Future for Creditors
The court has not yet decided on the value of Poolin Technology’s claim against its affiliates or how it will be treated in the bankruptcy process. The current agreements only establish signed opening offers totaling $52 million, less than one-third of wallet debt instruments in gross arithmetic.
More competitive offers could drive up the sale price at the auction scheduled for September 10. However, payments to customers will depend on what remains after bankruptcy costs, administrative fees, secured claims, and final claims reconciliation. The proposed process awaits court approval, with a qualified bid deadline of September 8 and closing expected by November 30.
Sources
- CryptoSlate – Bitcoin Mining Giant Poolin Files for Bankruptcy
- Law360 – Bankruptcy Authority
- Yahoo Finance – Bitcoin Miner Poolin Files Bankruptcy
- KuCoin News – Bitcoin Mining Giant Poolin Files for Bankruptcy
This article is published for informational and educational purposes. It does not constitute investment advice in any way. Conduct your own research (DYOR) before making any decisions.
