Last Updated on January 4, 2023 by Bitfinsider
Celsius Network LLC has agreed to allow Core Scientific Inc. to shut down more than 37,000 crypto mining machines that the insolvent digital-asset lender hasn’t been fully paying for, putting an end to a months-long dispute.
Core, a Bitcoin miner that hosts rigs for other parties, declared bankruptcy last month, blaming non-payment by Celsius in part for its demise. According to Core Scientific’s lawyers, their hosting agreement permits Core to pass on certain power expenses to Celsius, but the firm hasn’t been paying those bills since it filed for Chapter 11 bankruptcy protection in July.
The decision might set a precedent for other Core Scientific customers who are questioning the terms of their hosting agreements with the corporation. Soaring energy prices caused by harsh weather and Russia’s invasion of Ukraine have significantly increased operational expenses for electricity-intensive mining companies over the previous year.
As of the company’s Nov. 7 operational update, around 41% of Core’s overall fleet — or 100,000 servers — were allocated to hosting its clients.
“While the legal matter is still continuing, this is a significant victory for Core Scientific, who is likely to face more possible litigation from hosting clients whose costs were increased,” said Ethan Vera, chief operations officer of crypto-mining services provider Luxor Technologies. “Partners will be less likely to sue if there is precedent established for shutting off the equipment while the legal battle is continuing.”
According to court documents, Celsius owes Core at least $7.8 million in electricity charges related to the rigs through November. Core will save thousands of dollars each day by turning off the rigs, and the firm might earn an additional $2 million per month if it can sell the space now used by Celsius to other clients.
“We’re not looking to earn a buck off of Core after today,” said Chris Koenig, a lawyer representing Celsius, at a bankruptcy hearing on Tuesday. Celsius has agreed to let Core power down the rigs, and both parties are nearing an agreement to cease their hosting partnership, he said.
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