Cryptocurrency lender Celsius Network has accepted a request from Bitcoin (BTC) miner Core Scientific to end its hosting of over 37,000 mining devices. This follows the filing of bankruptcy proceedings by the miner.
Core Scientific submitted an amended proposal on January 3 containing “acceptable revisions for Celsius”, which stated that “all Celsius platforms will be shut down as of January 3, 2023 and will not restart during the transition period.”
On October 19, Core Scientific accused Celsius of not paying its energy bills, and later declared non-payment to be a major factor in the liquidity issues that caused the Bitcoin mining company to file for Chapter 11 bankruptcy on December 21.
On December 28, Core Scientific submitted a motion to reject the Celsius contracts, claiming that the company’s non-payment of electricity bills was a breach of contract.
According to legal documents, the deal could be terminated; Core Scientific was making $2 million a month from the current space, hosting the Celsius mining rigs.
The Hosting Agreement allowed Core Scientific to pass some of the energy costs on to Celsius, however these costs have risen significantly since then, due to the Russian invasion of Ukraine.
In the motion for denial, Core Scientific reported that it had been burdened with unpaid energy costs from Celsius totaling nearly $7.8 million as of December 28. The miner argued that it “cannot afford to continue to be burdened by the unpaid energy costs of Celsius.”
Related: Bitcoin Miners Report Mixed Results in Tackling Overexpansion Crisis Fueled by Debt
The cost of production has gone up for miners, but the price of Bitcoin has dropped, leading to a decrease in miner income and a drop in the “hash rate” (the revenue Bitcoin miners can make per unit of hash rate), which fell by more than 75% in 2022.
Many miners were unable to make ends meet due to lack of profitability and the high costs associated with expansion. The end of 2022 is expected to see miners struggling and share prices dropping.
Core Scientific’s share price has fallen by 99.15% in the past year, while Iris Energy and Riot Blockchain have seen declines of 91.79% and 85.09% respectively.
