Financially embattled Celsius Network LLC has agreed with Core Scientific Inc. for the Bitcoin mining firm to shut down more than 37k rigs belonging to the bankrupt crypto lender. Bloomberg reported that it was after Celsius Network failed to pay its part of a hosting deal that included settling some power costs for the mining operation hosted by Core Scientific.

Celsius Owes Core Scientific at Least $7.8 Million

Celsius filed for Chapter 11 bankruptcy in July 2022, and Core Scientific filed for bankruptcy on December 21st, 2022. Therefore, Core Scientific urged the Southern District of Texas bankruptcy court to reject its mining contracts with Celsius, claiming that it incurred over $2 million in monthly losses to maintain the unprofitable rigs.

Court documents show that Celsius Network owes Core Scientific at least $7.8 million in power costs as of November 2022. Unplugging the mining rigs will save the Bitcoin mining company approximately $28,840 daily. Core Scientific will likely sell the space occupied by Celsius’ rigs to generate more revenue.

‘We’re not seeking to make a dollar off of Core after today,’ said Celsius lawyer Chris Koenig. ‘We’ve agreed that they can turn off our rigs effective today and that they don’t get to charge us. We don’t continue to pay for it.’

The Decision Will Set a Precedent for Other Core Scientific Customers Facing Financial Woes

The decision to unplug Celsius’ mining rigs ends a months-long court battle that could serve as a legal precedent for other Core Scientific customers facing similar challenges due to rising energy and operational costs.

Ethan Vera, chief operations officer at crypto-mining services firm Luxor Technologies, told Bloomberg that the court battle was a vital win for Core Scientific and other clients will likely reconsider taking the Bitcoin miner to court.

‘While the legal case is still ongoing, this is a strong win for Core Scientific, who is likely facing other potential litigation from their hosting clients that had their cost increased. Partners will be less inclined to take them to court if there is precedent set for turning off the machines while the legal dispute is ongoing.’ he explained.

(By John P. Njui)