On February 2, 2026, NFN8 Group, a U.S. Bitcoin mining company, and its subsidiaries (NFN8 Capital and NFN8 Holdings) formally filed for Chapter 11 bankruptcy protection in the Western District of Texas Bankruptcy Court. According to the filing , NFN8 plans to sell the vast majority of its assets under court supervision to address its growing financial difficulties.
The halving effect and the Texas mine fire severely damaged operating cash flow.
NFN8's financial crisis stemmed primarily from the Bitcoin halving in April 2024, which reduced block rewards and significantly squeezed mining profits. Secondly, a major fire at its core mining farm in Crystal City, Texas, at the end of 2025 directly halted 50% of the company's mining capacity. Furthermore, the company faced ongoing litigation costs stemming from equipment sale-leaseback agreements and disruptions to hosting services due to Core Scientific's bankruptcy. These factors combined to deplete operating cash flow, ultimately forcing the company into bankruptcy reorganization.
Chapter 11 Bankruptcy Protection: A Safe Haven for Corporate Restructuring and Debt Negotiation
The company's application for Chapter 11 bankruptcy protection is a legal mechanism under U.S. bankruptcy law that allows for corporate restructuring. Unlike Chapter 7, which involves direct liquidation, Chapter 11 allows a company to continue operating under court supervision and temporarily freezes creditors' collection efforts (Automatic Stay). This "breathing room" allows the company to negotiate with creditors, develop a restructuring plan, or systematically sell assets to maximize asset value. For NFN8, filing for Chapter 11 means the company will not immediately go bankrupt but is attempting to preserve residual value through legal proceedings, preventing its assets from being sold off at a low price.
Secured $2.75 million in DIP funding to maintain operations during asset auction.
To maintain basic operations during the asset sale, NFN8 has secured up to $2.75 million in Debtor-in-Property (DIP) financing from Twelve Bridge Capital. DIP financing, a mechanism unique to Chapter 11 bankruptcy protection, allows bankrupt companies to obtain new funds during reorganization, with these funds having a higher priority in repayment than existing debts. The court has granted NFN8 temporary access to $1 million of this amount (approximately $675,000 after fees) to cover salaries, electricity, and professional services costs.
The sale-leaseback model has failed, affecting more than 250 counterparties.
NFN8's business model heavily relied on a "sale-leaseback" program. Under this model, customers purchased mining rigs and entrusted them to NFN8 for hosting and operation, receiving a fixed monthly fee during the contract period. However, as the Bitcoin hash price hit record lows, NFN8 was unable to generate enough cash from mining revenue to pay these lease payments, leading to multiple payment suspensions and investor lawsuits. Documents revealed that the program involved over 250 counterparties, and these contractual disputes ultimately proved to be the final straw that brought the company down.
Which assets are expected to be sold?
Despite its financial difficulties, NFN8's Chief Restructuring Officer, Erik White, stated that the company still holds over 5,000 "unencumbered" Bitcoin mining rigs, which will be the core assets in this bankruptcy auction. NFN8 currently operates multiple mining farms in Crystal City, Texas, and Shelby and Walnut, Iowa. The debtor plans to sell its mining rigs, related equipment and infrastructure, as well as operating locations and lease agreements, making it quite attractive to buyers seeking cheap computing power assets.
This article, titled "Bitcoin Mining Company NFN8 Files for Bankruptcy in the US Due to the Double Blow of the Mining Winter and Fires," first appeared on ABMedia, a ABMedia .
