Celsius Network's mining unit, which said in March it planned to go public, filed for Chapter 11 bankruptcy protection, along with its parent company, in the U.S. Bankruptcy Court for the Southern District of New York.

The mining unit of the troubled lender said in March it had filed a confidential S-1 draft registration with the U.S. Securities and Exchange Commission (SEC), to take the company public. At the time shares of most publicly traded crypto mining companies were tumbling, with the broader market selloff.

Fast forward to summer, with the continued bear market, miners were forced to sell their mined bitcoins to pay for their operating costs and some industry participants expected lot of miners to turn to M&A to survive the down turn as some faced debt crisis. Celsius Mining's bankruptcy filing is likely to be another blow to investor sentiment in the mining sector.

Celsius Mining's IPO process wasn't a successful option as investors couldn't get past the possibility of litigation risk while the parent company paused customer withdrawals and faced bankruptcy, according to a person familiar with the mining unit's IPO process.

The unit also faced similar investor sentiment while seeking potential "rescue financing" which would bail out the miner, if the IPO fell apart, according to the person, who didn't want to be identified.

Celsius Mining has been active in the industry via investing and lending as well as helping host the miners to which it lends. In March, bitcoin (BTC) miner Mawson (MIGI) signed a 100-megawatt co-location and $20 million debt deal with Celsius Mining.

Last year Celsius Mining said it invested a total of $500 million for its bitcoin mining operations in North America.

UPDATE: (July, 14, 4:30 UTC): Adds details of why IPO process of Celsius Mining failed.