Bitcoin miner Core Scientific is shutting down crypto lender Celsius’ 37,000 mining rigs, which the latter has not been paying for since July. According to a report by Bloomberg on Tuesday, both firms agreed on the decision in a court hearing on Jan. 3.
Core, which filed for Chapter 11 bankruptcy last month, pointed out Celsius has one of the reasons for its financial woes. The miner hosts rigs for Celsius, one of its biggest clients. The hosting deal requires the mining firm to pass on some energy cost to Celsius while the latter pays for the services.
A Month-Long Legal Battle
Both parties have been engaging in a months-long legal battle over the contract. Core claimed that Celsius has not been paying for these services since it filed Chapter 11 in July, while Celsius argued that the miner broke its service contract by supplying less power than required under their agreement.
The bitcoin mining firm asked for the latest court hearing, saying that its contract with Celsius made it lose over $28,000 daily. Core had also filed a motion seeking to terminate its contract with Celsius.
“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 during the bankruptcy hearing on Jan. 3.
Celsius Owes Core $7.8M
Celsius owes roughly $7.8 million for power costs tied to the rigs through November. According to the court filings, shutting down the rigs will save Core thousands of dollars per day and could generate $2 million in revenue per month if it sells the space currently occupied by Celsius to another client.
The latest decision to turn off Celsius mining rigs could serve as a legal precedent for other Core’s clients breaking the terms of hosting 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 commented.
