Shalini Nagarajan

<div id="highlights-block_62c7d1a64d87a" class="highlights">
 <ul>
 <li>Compass was recently accused of failing to pay an electricity bill</li>
 <li>Crypto miners have been selling bitcoin to meet operating expenses</li>
 </ul>
 
</div>



Cryptocurrency mining and hosting firm Compass Mining is eliminating staff after two top executives stepped down last week, admitting it “grew too quickly.”



In a <a href="https://education.compassmining.io/education/changes-at-compass-mining-a-message-from-co-ceos-paul-and-thomas/" target="_blank" rel="noreferrer noopener">statement</a> on Thursday, the firm’s recently appointed interim CEOs Thomas Heller and Paul Gosker said the size of the team would be reduced by 15%. Senior employees and the executive team have taken pay cuts of up to 50%, they added.



While Compass’ website doesn’t point to a specific employee headcount, its LinkedIn lists 83 employees. That suggests about 13 people have lost their jobs.



“While painful, these changes will enable Compass to stay agile and well-positioned in this evolving market, which has challenged many of our industry peers,” the interim CEOs wrote.&nbsp;



“Of all the decisions we have had to make as new CEOs, this will be far the hardest, and we take full responsibility for all of the changes that have been, and will be made, under our leadership.”



Compass <a href="https://cms.blockworks.co/compass-mining-appoints-two-interim-ceos-in-bid-to-rekindle-goodwill/" target="_blank" rel="noreferrer noopener">appointed</a> Heller and Gosker on June 28 after former CEO Whit Gibbs and Chief Financial Officer Jodie Fisher resigned. While the reason for their resignation was unclear, Compass <a href="https://compassmining.io/education/compass-mining-announces-ceo-resignation-and-naming-of-interim-leadership/" target="_blank" rel="noreferrer noopener">acknowledged</a> the “setbacks and disappointments” that detracted the company from its objective to make crypto mining easy and accessible.



In late June, the company faced accusations by hosting firm Dynamics Mining over an alleged failure to pay power compensation charges. Compass denied the claims and said Dynamics operated only about 1% of its contracted capacity.



“Compass has performed all of its obligations under its contracts with Dynamics, including its financial obligations,” it said in a <a href="https://compassmining.io/education/compass-mining-denies-dynamics-facility-allegations/" target="_blank" rel="noreferrer noopener">statement</a>.



The downturn in cryptocurrency markets, alongside a liquidity crisis in the crypto lending space, has forced several companies to cut costs or let go of employees. Exchanges and lenders including <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">Coinbase</a>, <a href="https://cms.blockworks.co/cryptocurrency-lender-blockfi-set-to-cut-staff-by-a-fifth/" target="_blank" rel="noreferrer noopener">BlockFi</a>, <a href="https://cms.blockworks.co/gemini-joins-growing-list-of-crypto-exchanges-cutting-staff-amid-downturn/" target="_blank" rel="noreferrer noopener">Gemini</a>, <a href="https://cms.blockworks.co/crypto-com-cutting-5-of-workforce-amid-digital-asset-downturn/" target="_blank" rel="noreferrer noopener">Crypto.com</a>, <a href="https://cms.blockworks.co/coinbase-backed-vauld-cuts-workforce-by-30-seeks-to-halve-exec-pay/" target="_blank" rel="noreferrer noopener">Vauld</a> and <a href="https://cms.blockworks.co/bullish-joins-rival-crypto-exchanges-in-cutting-workforce-report/" target="_blank" rel="noreferrer noopener">Bullish</a> are just some of the well-known names affected.&nbsp;



<a href="https://cms.blockworks.co/bitcoin-mining-economics-explained/" target="_blank" rel="noreferrer noopener">Bitcoin miners</a> seem to be the next on the chopping block — some have been selling their mined bitcoin due to revenues slumping along with the bear market, said Marcus Sotiriou, analyst at digital asset broker GlobalBlock.



Driven by recent market turmoil and rising energy costs, Core Scientific <a href="https://www.businesswire.com/news/home/20220705005347/en/Core-Scientific-Announces-June-Updates" target="_blank" rel="noreferrer noopener">said</a> on Tuesday it sold 7,202 bitcoin for about $167 million in June — leaving the miner with just 1,959 bitcoin and about $132 million in cash. Meanwhile, <a href="https://argoblockchain.com/news-room/2022-june-operational-update" target="_blank" rel="noreferrer noopener">Argo Blockchain</a>, <a href="https://bitfarms.com/app/uploads/2022/06/Bitfarms-PR-22-07-01-JuneProduction.Final73.pdf" target="_blank" rel="noreferrer noopener">Bitfarms</a>, <a href="https://www.riotblockchain.com/news-media/press-releases/detail/132/riot-blockchain-announces-june-2022-production-and" target="_blank" rel="noreferrer noopener">Riot</a> and <a href="https://www.cleanspark.com/investor-relations/news-releases/" target="_blank" rel="noreferrer noopener">CleanSpark</a> have also sold their bitcoin reserves to pay for operating expenses.

Bitcoin mining

Compass Mining Searches for Direction After Top Execs Resign

Sebastian Sinclair

<div id="highlights-block_62bbcd26cbeaf" class="highlights">
 <ul>
 <li>Compass&#8217; board of directors has appointed Chief Technology Officer Paul Gosker and Chief Mining Officer Thomas Heller as interim co-presidents and CEOs</li>
 <li>The appointments come as Compass has been caught up in a string of accusations from crypto hosting firm Dynamics Mining over Compass&#8217; alleged failure to meet its power consumption charges</li>
 </ul>
 
</div>



Bitcoin mining and hosting firm Compass Mining has appointed two new interim CEOs following the resignation of the firm&#8217;s head Whitney Gibbs and Chief Financial Officer Jodie Fisher.



The embattled mining company — supplier of ASICs and operator of bitcoin mining operations — said Tuesday it has appointed Chief Technology Officer Paul Gosker and Chief Mining Officer Thomas Heller as interim co-presidents and CEOs.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;Through this restructuring, the company is wholly focused on regaining the goodwill of our stakeholders and the community, as well as delivering on our mission of providing best-in-class service for miners of all sizes,&#8221; Compass said in a <a href="https://compassmining.io/education/compass-mining-announces-ceo-resignation-and-naming-of-interim-leadership/" target="_blank" rel="noreferrer noopener">company post</a> Monday via its website.</blockquote>



Compass&#8217; board of directors will begin seeking out a permanent president, CEO and CFO immediately, the firm said. The appointments come as Compass has been caught up in a string of accusations by hosting firm Dynamics Mining over its alleged failure to meet its power consumption charges. 



Blockworks attempted to contact Compass but did not receive a response by press time. Blockworks also spoke with one employee who declined to comment.



Dynamics, which had a contract with Compass, said it terminated its &#8220;Master Hosting Service Agreement&#8221; with the Delaware-based supplier earlier this month, citing six late payments and three nonpayments, the company said in a <a href="https://twitter.com/DynamicsMining/status/1541262827096358912?s=20&amp;t=gY1fUlOyqcCIxybvZ-BUeQ">tweet</a> Sunday.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">For clarity <a href="https://twitter.com/compass_mining?ref_src=twsrc%5Etfw">@compass_mining</a> power consumption <a href="https://twitter.com/Dynamics2k?ref_src=twsrc%5Etfw">@Dynamics2k</a> totaled $1.2 million and they only paid $415k and $250k initial power deposits. Compass claims that they gave money to <a href="https://twitter.com/Dynamics2k?ref_src=twsrc%5Etfw">@Dynamics2k</a> but the money was used to build out their facilities. <a href="https://twitter.com/hashtag/truth?src=hash&amp;ref_src=twsrc%5Etfw">#truth</a> <a href="https://t.co/9esvuCFulO">pic.twitter.com/9esvuCFulO</a>&mdash; DynamicsMining (@DynamicsMining) <a href="https://twitter.com/DynamicsMining/status/1541403191815950337?ref_src=twsrc%5Etfw">June 27, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In a June 10 <a href="https://twitter.com/DynamicsMining/status/1541262827096358912?s=20&amp;t=Kbmo6bc7PXrlvobbE4HJ3A" target="_blank" rel="noreferrer noopener">letter</a> to Gibbs from law firm Gordon, Fournaris &amp; Mammarella, P.A., acting on behalf of Dynamics, Compass is accused of failing to pay its utility bill as well as monthly hosting fees. Oxford and Lewiston, both Dynamics facilities maintained by Compass, also failed to make payments in violation of the agreement, the law firm said.



&#8220;All you had to was pay $250k for 3 months of power consumption,&#8221; Dynamics said in a <a href="https://twitter.com/DynamicsMining/status/1541568140118745089?s=20&amp;t=gY1fUlOyqcCIxybvZ-BUeQ" target="_blank" rel="noreferrer noopener">follow-up tweet</a> on Monday. &#8220;Since you don&#8217;t give your clients their Serial Numbers I couldn&#8217;t even help them. Twitter is the voice of your customer base, not the courtroom.&#8221;



Compass, however, denied the accusations levied against it, claiming Dynamics &#8220;misunderstood&#8221; the contracts it had signed with respect to Dynamics&#8217; facilities, according to a <a href="https://compassmining.io/education/compass-mining-denies-dynamics-facility-allegations/" target="_blank" rel="noreferrer noopener">separate post</a> late Tuesday.



&#8220;Compass has performed all of its obligations under its contracts with Dynamics, including its financial obligations,&#8221; the firm said. Dynamics operates approximately 1% of Compass Mining’s contracted capacity, according to Compass.



Accusations against Compass come as large numbers of bitcoin miners face <a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">possible liquidation</a> after taking out high-interest loans to fund their spending habits when bitcoin prices were relatively buoyant.



Depressed crypto prices, accelerated by recent developments with Terra&#8217;s stablecoin <a href="https://cms.blockworks.co/?s=Terra" target="_blank" rel="noreferrer noopener">collapse</a> and crypto lender Celsius&#8217; <a href="https://cms.blockworks.co/?s=Celsius" target="_blank" rel="noreferrer noopener">liquidity woes</a>, now appear to be eating into profitability margins for the mining hosting firms supplying the picks and shovels to crypto miners.



Miners rely on three main areas for keeping business activity out of the red, including a higher bitcoin price, lower or cheaper electricity prices and access to high-performance specialty mining rigs known as ASICs (application-specific integrated circuits).



All three elements, amid the market downturn, are now causing headaches for miners, as well as their creditors and other counterparties including mining operators and ASIC suppliers.



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