Core Scientific (CORZ), a bitcoin miner, has recently rejected its contract with Celsius Mining, its biggest customer with over 37,000 machines.
Core Scientific has announced that it would shut down mining rigs associated with Celsius Mining, adding to the latter’s troubles. The 2020 hosting agreement is the subject of a legal dispute between the two businesses. Core Scientific claims they are losing $2 million each month due to this partnership.
According to Bloomberg, Core maintains that Celsius isn’t paying its fair share of the bill. However, Celsius counters that Core raised its electricity tariff without consulting it beforehand, violating the service agreement.
Core Scientific sought the Southern District of Texas bankruptcy court to reject Celsius Mining’s contracts on Dec. 28, 2022. The petition claimed that Core Scientific might make $2 million per month by finding new customers or utilizing the area for its equipment if Celsius Mining’s machines were removed.
Judge David R. Jones concluded that the decision to reject did not go against the automatic hold imposed on Celsius’s assets. He said that Celsius’s objection was an attempt to “take advantage” of the court in its bankruptcy case and was a “strategic” action.
Since the situation is serious and costs $28,840 a day in electricity, Core Scientific requested a hearing. Celsius opposed Core Scientific’s haste but supported contract termination and equipment return.
Celsius said that the mining rigs in issue are subject to the bankruptcy court’s jurisdiction for the Southern District of New York (SDNY), where Celsius’ case is now being handled. The request to reject them breaches the automatic stay on Celsius’ estate.
Core Scientific and Celsius both filed for bankruptcy
Both Core Scientific and Celsius Network have filed for Chapter 11 bankruptcy. Celcius provided a Jan. 3 bar date — the deadline for all customers to file a claim against the debtor in bankruptcy — after filing for bankruptcy. However, recently it filed a motion to extend the bar.
With more than 37,000 machines hosted in its facilities, Celsius is not only one of Core’s largest customers but also one of its largest secured noteholders, holding $54 million worth of secured convertible notes, or 10% of the total issuance, according to Kirkland & Ellis attorney Chris Koenig, who is representing Celsius in Core’s bankruptcy case.