NFN8 Group, Inc. and its two operating subsidiaries filed for Chapter 11 bankruptcy protection on February 2, 2026, in the U.S. Bankruptcy Court for the Western District of Texas, seeking to conduct a court-supervised sale of substantially all assets after a catastrophic fire and market disruption undermined the company's ability to service obligations to more than 250 equipment lessors. The debtors secured $2,750,000 in debtor-in-possession financing from Twelve Bridge Capital, LLC to fund operations during the restructuring process.
The filing follows a series of operational setbacks that eroded the company's liquidity, including compressed mining margins following the April 2024 Bitcoin halving, escalating litigation costs, and a fire at the company's primary Texas facility between Christmas and New Year's Day that reduced mining capacity and revenue by as much as 50 percent.
Company Background and Business Operations
The debtors operate an industrial-scale Bitcoin mining business through a parent company structure. NFN8 Group, Inc. serves as the parent entity and owner of NFN8 Capital, LLC and NFN8 Holdings, LLC. Through these entities, the debtors own, lease, and operate thousands of industrial-grade Bitcoin mining supercomputers deployed across multiple facilities with dedicated power infrastructure, hosting arrangements, and operational personnel.
The company generates revenue primarily from Bitcoin block rewards and transaction fees produced by mining operations. Additional revenue sources include equipment sales and leases, joint ventures, and hosting fees. Mining revenues are used to fund equipment acquisition, operations, hosting, repairs, fleet expansion, lease obligations, joint venture payments, and operational continuity investments.
NFN8 Capital owns over 5,000 unencumbered Bitcoin mining supercomputers that are not subject to lease or financing arrangements.
The Sale-Leaseback Equipment Financing Program
A key component of the debtors' capital structure is a sale-leaseback equipment financing program that enabled the company to fund the acquisition and deployment of Bitcoin mining equipment at scale. Under this program, NFN8 Capital sold Bitcoin mining supercomputers to third-party counterparties pursuant to purchase and sale agreements, while NFN8 Holdings simultaneously leased the same machines back under fixed-term lease agreements, typically ranging from two to four years.
The program involves more than 250 separate lease counterparties and several thousand miners deployed across the debtors' hosting facilities. NFN8 Capital was responsible for procuring, assembling, deploying, hosting, and maintaining the equipment, while NFN8 Holdings operated the machines as part of its integrated mining platform.
Lease payment obligations under the program were funded from revenues generated by mining operations and were therefore dependent on the continued operation of the underlying equipment and prevailing mining economics. For several years, the debtors performed under these arrangements and made lease payments as required.
Events Leading to Bankruptcy
Hosting Provider Bankruptcy and First Payment Suspension
In approximately 2020, the debtors entered into a strategic hosting arrangement with Core Scientific, Inc., then described as the world's leading digital infrastructure provider. By late 2022, Core Scientific hosted a majority of the miners operated by the debtors.
In December 2022, Core Scientific filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas. Although Core Scientific continued hosting certain miners during the early stages of its bankruptcy case, in mid-2023 it terminated the debtors' hosting agreements, leaving the debtors with thousands of operational miners that could not be immediately redeployed.
To avoid a disorderly shutdown, the debtors implemented a targeted, temporary suspension of lease payments tied to miners that were no longer operational due to the Core Scientific termination. For lessors whose miners remained operational at non-Core Scientific sites, the company continued both operations and lease payments. For lessors whose miners were stranded, the company provided notice and temporarily suspended payments absent objection. For any lessor that objected, payments continued.
In February 2024, once alternative hosting arrangements were identified, the company proposed a uniform modification under which suspended payments would resume on a staggered basis and lease terms would be extended by the duration of the suspension. Over 95 percent of affected lessors agreed to this modification.
Bitcoin Halving and Second Payment Suspension
In early 2024, the company expected to resume full lease payments based on several assumptions: self-hosted facilities would be operational by spring 2024, the company had paid off its only outstanding loan by February 2024, and post-halving mining economics would follow historical patterns.
Although the April 2024 Bitcoin halving was anticipated, the post-halving market response deviated materially from prior cycles. Revenue per terahash recovered far more slowly than in previous halvings, resulting in sustained compression of mining margins across the industry. Simultaneously, the company experienced unexpected delays and cost overruns in building its hosting facilities.
By June 2024, mining revenues were insufficient to fund lease obligations, operating expenses, and capital expenditures simultaneously. To preserve liquidity and maintain operations, the company implemented a second temporary suspension of certain lease payments.
As conditions improved through increased miner deployment, reduced capital expenditures, and partial recovery in mining economics, the company resumed payments in mid-November 2024. Payments continued until late 2025, when further disruptions necessitated another suspension.
Litigation
On October 10, 2024, three participants in the sale-leaseback program filed suit in the U.S. District Court for the Western District of Texas against the debtors and certain affiliates and control persons. The lawsuit asserted claims for breach of contract, fraud, and alleged securities violations, all of which were denied by the debtors. The plaintiffs sought extraordinary pre-judgment relief, including injunctive relief and the appointment of a receiver. After extensive discovery and briefing, the court denied all such relief.
On March 17, 2025, the court granted the defendants' motion to compel arbitration. A final arbitration hearing was scheduled for January 26, 2026, but did not proceed. The disclosure indicates that the cost of completing the arbitration is substantial, and an adverse ruling followed by post-judgment collection efforts could result in value-destructive disruption of operations.
Catastrophic Fire
During the week between Christmas and New Year's Day 2025, a fire occurred at the company's Crystal City, Texas facility, reducing mining capacity and revenue by as much as 50 percent. The debtors maintain insurance coverage and expect insurance proceeds, although the timing of payment remains uncertain.
Hosting Facilities
Following the Core Scientific disruption, the debtors internalized their hosting operations. The debtors currently operate three mining facilities: one at 2205 Old Uvalde Highway, Crystal City, Texas; one at 38773 Whippoorwill Road, Shelby, Iowa; and one at 2004 F58, Walnut, Iowa.
NFN8 Capital leases approximately 78,377 square feet of warehouse space at the Crystal City location from Midnight Enterprises, LLC, a non-insider, pursuant to a lease expiring March 31, 2029.
The Iowa facilities are both subject to separate but materially identical real property leases between NFN8 Capital and UR Management, LLC. Both leases commenced on December 21, 2023, and expire on January 31, 2029. After the five-year lease term for each Iowa location, NFN8 Capital has the exclusive option to purchase each site with all improvements for $100,000.
Chapter 11 Strategy and Relief Sought
The filing declaration states that despite sustained efforts, the debtors have been unable to resolve the pending arbitration. The escalating cost of litigation, combined with the operational disruption caused by the fire, materially impaired liquidity. An adverse arbitral award followed by post-judgment collection efforts would likely result in operational paralysis and value-destructive dismemberment of the mining platform.
The debtors seek Chapter 11 protection to preserve value and ensure an orderly, transparent restructuring. The stated strategy includes obtaining approval of debtor-in-possession financing, conducting a court-supervised marketing and sale process for substantially all assets pursuant to approved bidding procedures, and maximizing recoveries for stakeholders. Following a sale, claims will be reconciled and proceeds distributed in accordance with the Bankruptcy Code.
First Day Relief
The debtors filed several first-day motions seeking relief to facilitate operations during the bankruptcy case:
Joint Administration: The debtors request that the three cases be jointly administered for procedural purposes to save time and expense, while not seeking substantive consolidation of the bankruptcy estates.
Complex Case Designation: The debtors filed a notice designating the cases as complex due to more than 100 creditors and debts exceeding $10 million.
Extension for Filing Schedules: The debtors request an additional 21 days to file their schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, and statements of financial affairs, for a total of 35 days after the petition date through March 9, 2026.
DIP Financing: The debtors seek approval of a $2,750,000 multi-draw term loan facility from Twelve Bridge Capital, LLC, a third-party lender not affiliated with insiders of the debtors. An initial interim draw will be funded promptly upon entry of the interim order, with subsequent advances subject to court approval and milestones tied to the proposed sale process. The liens granted in connection with the DIP facility attach solely to the debtors' unencumbered property and do not prime or otherwise impair any existing secured creditor.
Cash Management System: The debtors seek authorization to continue using their existing cash management system, maintain their existing bank accounts and business forms, honor certain prepetition obligations related thereto, and continue performing certain intercompany transactions. The system includes five bank accounts at Burling Bank and a cryptocurrency wallet with Kraken that holds the debtors' cryptocurrency interests. When Bitcoin is successfully mined, those interests are sold on the Kraken platform and the resulting cash is transferred to the NFN8 Holdings account. The debtors pay approximately $2,500 per month in bank fees.
Premium Finance Agreement: The debtors seek authority to continue meeting payment obligations under a premium finance agreement with IPFS Corporation for commercial property, general liability, and inland marine insurance. The premium finance agreement grants IPFS a security interest in all right, title, and interest to the policies, funds which may become payable under the scheduled policies, unearned premiums and dividends, and interests arising under a state guarantee fund.
Corporate Governance and Conflict Management
The filing disclosure indicates that one of the debtors' principals is affiliated with a potential purchaser. To eliminate any appearance of impropriety and actual conflicts of interest, that principal has been fully removed from all decision-making authority relating to the bankruptcy cases and any sale process and is walled off from all such matters.
To effectuate this separation, the debtors appointed an independent director as sole director and a Chief Restructuring Officer, vesting them with exclusive authority over all restructuring and sale-related decisions, including negotiation and execution of transaction documents, selection of bidders, engagement of professionals, and appearances before the court.
The Chief Restructuring Officer is a Managing Director of HMP Advisory Holdings, LLC d/b/a Harney Partners. Harney Partners was initially retained as financial advisor to the company in March 2025 to provide financial and restructuring advisory services in connection with the debtors' evaluation and development of strategic alternatives to address operational and liquidity challenges. Those challenges led to the conclusion that a targeted sales process would provide the best results for creditors and the estate.
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