Singapore-based Bitcoin mining firm Poolin and its U.S. affiliates, Lonestar Dream Inc. and Lonestar Taproot LLC, filed for Chapter 11 bankruptcy protection in New Jersey on July 22. The company is also seeking court approval for a $52 million sale of its Texas mining properties.
Bankruptcy Filing and Financial Overview
The bankruptcy filing comes nearly four years after Poolin froze customer withdrawals, leaving thousands of wallet users with IOU tokens and transforming a mining business failure into a protracted creditor dispute. Court records filed in the U.S. Bankruptcy Court for the District of New Jersey indicate Poolin listed between 10,001 and 25,000 creditors, with petition assets estimated between $1 million and $10 million.
Chief Restructuring Officer Michael DuFrayne’s declaration stated prepetition obligations at approximately $173.1 million, with roughly $163.7 million attributed to unsecured IOUs issued to Poolin Wallet customers. The company’s current bankruptcy proceedings are focused on divesting its Texas assets rather than resuming mining operations. Lonestar Dream ceased mining and hosting activities at its Pyote and Tarbush sites on July 10, according to the filing documents.
Texas Asset Sale
Poolin has entered into asset purchase agreements with Thor CALAP LLC for a combined $52 million stalking-horse bid. This offer includes $15 million for the Pyote property, along with associated power rights and equipment, and $37 million for Tarbush power rights and equipment. The transaction remains contingent on competing bids and court approvals.
The company spent over three months marketing the assets, engaging with more than 335 potential buyers, including cryptocurrency miners and operators in the artificial intelligence and high-performance computing sectors. This outreach resulted in 28 confidentiality agreements, seven letters of intent, and three additional expressions of interest.
Challenges in Texas Expansion
Poolin’s expansion in Texas faced significant hurdles after the company relocated its mining operations from China following Beijing’s 2021 ban on mining. The company had anticipated receiving up to 600 megawatts of power but only secured 100 megawatts. Consequently, the equipment procured for its U.S. operations proved to be in excess of its needs.
The sale of some of this surplus equipment resulted in an $8.8 million loss between fiscal years 2023 and 2025. Ultimately, Lonestar Dream and Lonestar Taproot accumulated approximately $45.9 million in losses.
Broader Financial Difficulties
Poolin’s financial woes extend beyond its mining activities. In June 2022, as Bitcoin prices dropped below $20,000, Tether issued margin calls against collateral the firm had pledged through the Poolin Wallet. The company subsequently transferred nearly all of this collateral to Antalpha and secured a loan of about $213 million against crypto assets valued at just under $356 million.
However, in September 2022, Poolin Wallet suspended withdrawals and issued approximately $163.7 million worth of IOU tokens to customers. According to the filing, around 11,700 wallet users held balances exceeding $100.
Bitcoin’s further decline to below $16,800 in November 2022 led Poolin to cease operations, and Antalpha liquidated the collateral. Management estimated that approximately $260 million was owed to Antalpha against digital assets valued at close to $265 million at that time.
Poolin was once a dominant force in the Bitcoin mining landscape, holding roughly 14% of the Bitcoin network’s mining share in 2019. The company’s remaining value now hinges on the sale of its Texas assets and the resolution of the bankruptcy proceedings.
The court-supervised auction will determine the recovery amount for creditors. Any distributions will be subject to competing bids, sale expenses, administrative claims, and the approval of the proposed liquidation plan.
Leave a Reply