Crypto Miner Core Scientific to Shut 37,000 Celsius Rigs
(Bloomberg) — Celsius Network LLC has agreed to let Core Scientific Inc. shut off more than 37,000 crypto mining rigs that the bankrupt digital-asset lender hasn’t been fully paying for, resolving a months-long conflict.
Core, a Bitcoin miner that hosts rigs for third parties, itself filed for bankruptcy last month and partially blamed non-payment by Celsius for its downfall. Their hosting deal allows Core to pass on some power costs to Celsius, but the company hasn’t been paying those bills since it filed for Chapter 11 protection in July, according to lawyers for Core Scientific.
The case could serve as legal precedent for other Core Scientific customers disputing the terms of hosting agreements with the company. Over the last year, soaring energy prices due to extreme weather conditions and Russia’s invasion of Ukraine have sharply driven up operating costs for electricity-intensive mining operations.
About 41% of Core’s total fleet — or 100,000 servers — were dedicated to hosting its customers as of the company’s Nov. 7 operational update.
“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,” said Ethan Vera, chief operations officer at crypto-mining services firm Luxor Technologies. “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.”
Celsius owes Core at least $7.8 million for power costs tied to the rigs through November, according to court papers. Turning off the rigs will save Core thousands of dollars per day and the company could bring in an additional $2 million per month in revenue if it can sell the space currently occupied by Celsius to other customers.
“We’re not seeking to make a dollar off of Core after today,” said Chris Koenig, a lawyer for Celsius, in a bankruptcy hearing Tuesday. Celsius has agreed to let Core power down the rigs and both sides are close to finalizing a deal to end their hosting relationship, he added.
Core’s bankruptcy is Core Scientific Inc., 22-90341, U.S. Bankruptcy Court for the Southern District of Texas (Houston).
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