Core Scientific estimates that canceling the agreement with Celsius would provide $2 million in monthly revenue as long as bitcoin remains around $16,700.
Bankrupt cryptocurrency lender Celsius Network has agreed to let Bitcoin Miner Core Scientific shut down more than 37,000 miners it hosted for Celsius during bankruptcy proceedings.
Core Scientific filed a revised proposed order on Jan. 3, containing a "Celsius Acceptable Amendment," stating that "all Celsius drilling rigs will be powered off beginning Jan. 3, 2023, and will not be Restart." On Oct. 19, Core Scientific accused Celsius of failing to pay electricity bills, later saying the nonpayment was a major factor in the liquidity issues that led the bitcoin miner to file for Chapter 11 bankruptcy on Dec. 21.
On December 28, Core Scientific filed a motion seeking approval to reject Celsius' contract, claiming the company's failure to pay electricity bills constituted a material breach of contract. According to court documents, the termination of the agreement will apparently allow Core Scientific to generate $2 million in monthly revenue from the space the Celsius mining equipment currently occupies.
The terms of the hosting agreement allow Core Scientific to pass on to Celsius some of the electricity costs, which have increased significantly since the Russian invasion of Ukraine.
Paying the increased electricity bills cost Core Scientific nearly $7.8 million as of Dec. 28, according to the motion to deny, with the miner noting that it “cannot afford to continue to bear the burden of Celsius’ unpaid electricity bills.” Increased production costs for miners while Bitcoin’s price has fallen has eroded miners’ bottom lines and caused the “hash price” — the revenue a Bitcoin miner can earn per unit of hashrate to drop by more than 75% by 2022 .
A lack of profitability for miners, combined with costs associated with expansion efforts, has left many bitcoin miners struggling through 2022, sending shares tumbling as a result. Shares of Core Scientific are down 99.15% for the year, while shares of Iris Energy and Riot Blockchain are down 91.79% and 85.09%, respectively.
