Core Scientific has come to an agreement with Celsius Network to shut down the 37,000 mining rigs that it was hosting for the latter.
Power Cut To Celsius’s Rigs
The Celsius Network has agreed to let the Bitcoin miner Core Scientific cut power to the 37,000 mining rigs it was hosting for the defunct crypto platform due to Celsius’s ongoing bankruptcy proceedings. The mining company initiated this move by filing a revised proposed order on January 3, claiming that all Celsius mining rigs would be powered down immediately. The filing also stated that the powered-down rigs would not be restarted during the transition period.
Celsius Defaulted On Electricity Fees
This move comes after several months of Celsius defaulting on power bills, for which Core Scientific even accused Celsius on October 21. In fact, the lack of payment had even created liquidity issues for the Bitcoin miner, for which it had to declare bankruptcy on December 21.
As a result, Core Scientific filed a motion on December 28 to reject the contract since Celsius had been in breach of contract due to non-payment of bills. The court filings have revealed that Core Scientific has covered around $7.8 million of power fees for Celsius till December 28 and claimed that it could not afford to continue shouldering the burden of Celsius’s unpaid power costs.
By terminating the Celsius contract, Core Scientific would be able to generate a revenue of $2 million per month by renting out the space currently occupied by the Celsius mining rigs.
BTC Mining Not Profitable Anymore
Bitcoin mining is not a profitable expedition anymore. Costs of production have increased while Bitcoin prices have dropped. The Russia-Ukraine war has been a major factor leading to the rising costs of electricity, something that Bitcoin mining rigs need lots of. On top of that, the plummeting value of Bitcoin has also eaten into miners’ profits. In fact, Bitcoin’s hash price, which is the revenue miners can earn per unit of hash rate, has dropped by 75% in 2022.
As a result, share prices have also dropped, with Core Scientific itself losing almost 99.15% in its share prices throughout 2022. On the other hand, bankrupt crypto firm Celsius has already been ordered by a judge to refund customers’ crypto assets worth $44 million. It is to be seen if Celsius returns any of the fees that it owes to the mining company.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
