Poolin has filed for Chapter 11 bankruptcy to liquidate mining assets amid significant financial woes, affecting thousands of creditors.
The Poolin group has initiated Chapter 11 bankruptcy proceedings in the U.S., aiming to liquidate its mining assets in Texas and cease operations. This case is currently being heard in New Jersey.
The bankruptcy filing represents Singapore-based Poolin Technology PTE. LTD. and its U.S. subsidiaries, Lonestar Dream Inc. and Lonestar Taproot LLC.
According to the bankruptcy documents, Poolin lists between 10,001 and 25,000 creditors, with assets estimated between $1 million and $10 million, and liabilities ranging from $100 million to $500 million. The restructuring director, Michael Dufresne, indicated that the company's pre-petition obligations are around $173.1 million.
Dufresne emphasized that the bankruptcy process is not intended to save Poolin as a functioning business but to facilitate a court-sanctioned asset sale under Section 363 of the U.S. Bankruptcy Code.
On July 10, Lonestar Dream ceased mining and hosting operations at its Pyote and Tarbush sites in West Texas, retaining a minimal staff for security and sale preparations. Thor CALAP LLC has proposed $15 million for the Pyote site, including power rights and equipment, while another $37 million is offered for Tarbush's power and equipment rights. This totals $52 million, serving as the minimum bid for the upcoming auction, where assets may be sold collectively or individually depending on court approval.
Prior to this filing, Poolin's consultants conducted an extensive search for potential buyers over three months, contacting over 335 parties, including operators of AI and data centers, private equity funds, and miners. This outreach resulted in 28 non-disclosure agreements and seven preliminary offers.
Impact of Market Conditions on Poolin
Founded in China in 2017 by Zhijiao "Kevin" Pan and others, Poolin was recognized as the largest cryptocurrency mining pool globally by September 2019. The company also developed the Poolin Wallet, which allowed users to borrow USDT against crypto assets.
However, following China's 2021 mining ban and the subsequent cryptocurrency market crash in 2022, Poolin's business model faced significant challenges. The firm transferred collateral from its wallet clients to Antalpha Technologies and borrowed around $213 million against crypto valued at approximately $355.8 million, which was used for U.S. expansions and operational expenses.
In September 2022, the Poolin Wallet suspended withdrawals due to a liquidity crisis, issuing IOUs to clients, with approximately 11,700 clients holding balances over $100. Following this, Antalpha liquidated the collateral, estimating Poolin's debt at around $260 million against digital assets of about $265 million. Since then, Poolin has struggled to operate normally, with remaining assets reportedly including $1.2 million in a New Jersey bank account.
Challenges with Texas Mining Operations
After the market downturn, Poolin attempted to pivot by focusing on U.S. mining operations, selecting the Pyote and Tarbush sites in Texas in 2021. Initial plans aimed for 600 MW of power, but only 100 MW was connected in the first phase. The company overordered equipment, leading to discounted sales of excess inventory, resulting in estimated losses of $8.8 million from 2023 to 2025.
As of May, Lonestar Taproot reported a net book value of fixed assets of $41.7 million. In December 2023, a proposed sale to China Green Agriculture for $49 million did not finalize, leaving Pan as the sole shareholder of Lonestar Dream.
Several wallet holders have initiated lawsuits against the debtors in both the U.S. and Singapore, with recoveries dependent on the final sale price of the assets and court approval for the liquidation plan. Poolin currently controls only 0.24% of Bitcoin's hashrate, a stark contrast to leading competitor Foundry USA, which commands 26.1%.
