- Core Scientific will shut down thousands of bitcoin mining rigs tied to Celsius.
- Core Scientific says the mining rigs are costing the firm $2 million in revenue per month, per court filings.
- Both companies filed for Chapter 11 bankruptcy last year amid the crypto bear market.
One of the world’s largest bitcoin miners will shut off thousands of mining rigs tied to Celsius Network as a part of the firms’ bankruptcy proceedings.
Core Scientific will stop hosting over 37,000 rigs that it says Celsius hasn’t been fully paying for, according to a court filing on Tuesday. Celsius claims that Core Scientific increased its power rate, which wasn’t stipulated in the two embattled companies’ initial agreement.
Celsius attorney Chris Koenig, of the Kirkland & Ellis law firm, said “we’ve agreed that they can turn off our rigs effective today, and that they don’t get to charge us, we don’t continue to pay for it” in a bankruptcy hearing on Tuesday.
Core Scientific asked a Texas bankruptcy court to end Celsius’s hosting contracts in late December, with the publicly-listed miner alleging that it can generate a revenue of $2 million per month if the agreement is ended.
Celsius filed for Chapter 11 bankruptcy after a liquidity crisis in July, stemming from overleveraged bets and promising customers high yields for depositing their tokens on its platform.
Core Scientific followed suit and filed for bankruptcy in December, as miners became pinched by a decline in bitcoin prices and higher energy costs. Bitcoin is down over 63% in the past year, according to Messari on Wednesday.
Asset manager BlackRock committed $17 million to Core Scientific as part of a $75 million loan from the bankrupt bitcoin miner’s secured convertible note holders, per a US Securities and Exchange Commission filing in December. BlackRock is Core Scientific’s largest shareholder, according to FactSet.
Core Scientific and Celsius did not immediately respond to Insider’s request for comment.