Panic error
 

What would cause a panic error?

Panic indicates the system encountered a system it couldn't correct so it crashed. Usually it will dump memory registers that you can examine to try to find out why but it takes some fairly sophisticated knowledge.

That said the most common reason for "panics" is hardware failure. Some card or drive went down and the system couldn't deal with it so it crashed. If your system booted afterwards then check to see if all the hardware you expected is still there so far as the OS is concerned.

just out of curiosity, can a kernel panic cause a hardware failiur?

vice-versa - Hardware failure causes kernel panic - since the kernel itself remains unchanged until you recompile it doesn't cause hardware failures though on reboot it is possible you won't see the hardware because the kernel no longer can detect it as it has already gone bad.

It is of course possible to modify your kernel in such a way that it has conflicts compiled in and will never boot without a panic. You should always save a copy of your original kernel when making a new one so you can boot off the original if the new one fails.