Troubled Bitcoin miner Core Scientific will shut down more than 37,000 crypto mining rigs belonging to bankrupt crypto lender Celsius Network as both firms finally reach an agreement in court.
Core Scientific, which hosts rigs for Celsius, filed for Chapter 11 bankruptcy in December and had partially blamed the lender for its financial troubles. Both companies have a hosting deal in which the mining firm transfers some energy costs to Celsius.
The Legal Fight
The two parties have been in a legal battle over the contract as Core claims that Celsius has not been paying for these services since filing for Chapter 11 bankruptcy in July. In contrast, the lender argues that the miner supplied it with less power than required under their contract agreement.
Core had requested a court hearing on Jan 3, saying its contract with Celsius made it lose more than $28,000 daily.
“We’re not seeking to make a dollar off of Core after today. Celsius has agreed to let Core power down the rigs and both sides are close to finalizing a deal to end their hosting relationship,” Chris Koenig, a lawyer for Celsius, said in a bankruptcy hearing on Tuesday.
Celsius Owes Core Over $7.8M
According to court filings, Celsius Network, Core’s biggest client, owes the miner approximately $7.8 million for energy costs tied to the rigs through November. This would mean that shutting down Celsius rigs could save Core thousands of dollars daily and generate more revenue if the miner gives Celsius’ space to another customer.
Experts believe Core will likely win the case, and the verdict could serve as a legal precedent for other clients violating hosting contract agreements with the miner.
“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,” Ethan Vera, chief operations officer at crypto-mining services firm Luxor Technologies said.