Great North Data, a Canadian Bitcoin mining and AI-algorithm processing facility, has filed for bankruptcy.
The company is said to have $13.2 million in liabilities and just $4.6 million in tangible assets.
It has since emerged that a portion of this cash is owed to provincial government and federal government agencies who invested money in the cryptocurrency business.
The two public entities, funded by taxpayers’ money, are the Atlantic Canada Opportunities Agency (ACOA) and the Business Investment Corporation of Newfoundland and Labrador.
The agencies are owed $281,675 and $313,718 Canadian dollars respectively. The owners of the bankrupt Bitcoin mining facility have not been publicly named.
First reported by Canadian news outlet CBC, the news that taxpayers’ money went into such a scheme has caused a significant backlash by local Canadians, with many taking to the article’s comments section to voice their dismay.
User Sean Shott wrote:
“Why not name the owners? They have $315,000 of taxpayers’ dollars?”
Another user called the ACOA a “money incineration machine”. The ACOA declined to comment on the matter, saying it had a duty to protect client confidentiality.
Legal dispute with Hong Kong firm
It’s speculated that Great North Data’s financial problems may have arisen from a legal dispute with Hong Kong-based cryptocurrency mining hardware company Bitmain.
The huge Bitcoin mining company, which has recently opened a new facility in Texas, alleged business problems had escalated between the parties since the beginning of their relationship in 2013.
It is believed that Bitmain provided the mining hardware for the Canadian crypto mining company on a loan basis.
Great North Data cited sprawling construction costs for its new facility as a reason for its inability to repay or continue its operations, causing significant strain on its relationship with Bitmain.
Court documents revealed that Great North Data had emailed Bitmain in August 2017, claiming:
“We have had significant cost overruns and have failed to find financing to cover them.”
However, it’s taken another two years for the facility to finally file for bankruptcy.
Canadian officials have been traditionally welcoming to cryptocurrency businesses, ushering in new regulations earlier this year to help Canada’s crypto companies become compliant and build commercial relationships.
Despite this, using public money to fund cryptocurrency projects may cause Canadian taxpayers to seriously question both regional and national government priorities.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.